6 Institutional Investors Bet On Ethereum Futures ETFs Amid Bitcoin Spot ETF Hype

Key Points:

• Institutional investors shift focus from Bitcoin Spot ETFs to Ethereum Futures ETFs as the SEC reviews applications for both.
• Volatility Shares leads the charge, seeking to issue the first ETF tracking Ethereum futures contracts.
• The competition heats up, with multiple firms, including Grayscale, Bitwise, Roundhill, and VanEck, vying for approval to launch their own Ethereum Futures ETFs.

While the U.S. Securities and Exchange Commission (SEC) continues its scrutiny of Bitcoin Spot ETF applications, a fresh wave of filings for Ethereum Futures ETFs has been set into motion.

Leading the charge, Volatility Shares, the firm responsible for introducing the first leveraged Bitcoin futures ETF, is now aiming to launch a groundbreaking ETF centered around Ether – the second-largest cryptocurrency by market capitalization.

The recent success of Volatility Shares’ 2x Bitcoin Strategy ETF (BITX) – the country’s inaugural leveraged Bitcoin futures ETF – has paved the way for the firm’s new venture. This ETF aims to deliver investment results corresponding to twice the daily excess return of the S&P CME Bitcoin Futures Daily Roll Index.

Presenting their plans to the Securities and Exchange Commission on July 28, Volatility Shares outlined their proposal for an ETF that tracks Ethereum futures. This proposed ETF is designed to offer investors exposure to digital assets by closely monitoring the movement of Ethereum’s futures contracts.

Following Volatility Shares’ lead, several other companies have joined the race to introduce Ethereum futures ETFs. Grayscale Investments, Bitwise Asset Management, Direxion, and Roundhill Investments all expressed their intentions to participate, but not all have remained committed.

Recent reports indicate that six companies are currently vying for approval to launch Ethereum Futures ETFs. Alongside Volatility Shares, Bitwise, Roundhill, VanEck, Proshares, and Grayscale filed their applications on August 1.

Notably, Roundhill Investments and VanEck filed their Ethereum futures ETF applications on the same day, with experts speculating on Roundhill’s preference for ETH futures over the increasingly crowded Bitcoin Spot ETF market. This strategic move could be attributed to a desire to bolster expertise in the metaverse or gain an early advantage amid fierce competition in the ETF Spot sector.

Roundhill Investments, a registered SEC investment advisor, has been an industry pioneer, providing innovative thematic ETFs since its debut in 2018.

If approved, Ethereum Futures ETFs would serve as a gateway for investors to access digital assets through Ethereum’s futures contracts, offering a more traditional investment vehicle that bypasses the complexities of purchasing, storing, and safeguarding actual Ether.

It is essential to understand the distinction between a BTC Spot ETF and an Ethereum Futures ETF. While the former closely tracks the price of physical Bitcoin, the latter’s value derives from futures contracts. Despite the potential benefits of a BTC Spot ETF, the SEC has not yet approved any ETF applications linked to Ethereum futures contracts, possibly due to concerns about Ether’s classification as well as liquidity levels.

As the SEC continues its deliberations on the BTC Spot ETF filings from industry giants such as BlackRock and Fidelity, other firms are seizing the opportunity to explore the Ethereum Futures ETFs market. With institutional interest in the crypto space on the rise, diversifying investment strategies in the cryptocurrency market has become a pivotal trend.

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