In a historic move, the first US Ethereum Futures Exchange-Traded Fund (ETF) is launched, signaling a major breakthrough in cryptocurrency investment options.
Yesterday, news regarding exchange-traded funds (ETFs) based on futures contracts on the price of Ethereum (ETH) broke. Even while there are already ETFs on ETH futures available, even in the US, yesterday’s is still the first in the nation.
The Bitcoin Strategy ETF (BTF) Valkyrie
The Valkyrie Bitcoin Strategy ETF, which is traded on Nasdaq with the ticker BTF, is the new offering.
BTF is an actively managed fund that is primarily collateralized in Bitcoin price futures contracts, as opposed to the traditional ETF that just mirrors the price trend of Bitcoin.
Its launch year is 2021, and its entire net asset value is over $24 million.
The fund is now the first in the U.S. markets to permit simultaneous dual exposure to BTC and ETH thanks to the SEC’s approval of the entry of ETH futures.
Indeed, Ethereum price futures contracts are now being purchased by fund manager Valkyrie Funds and added to the BTF ETF as collateral.
The fund’s updated version will go live in the exchanges on Monday under the ticker BTF.O and change its name to Valkyrie Bitcoin and Ether Strategy ETF.
Other firms, like VanEck and ProShares, are getting ready to introduce ETH futures-based exchange-traded funds (ETFs) in the US market in addition to the Valkyrie hybrid ETF.
News about Futures ETF: How it affects the price of ETH
The news surfaced yesterday, but it doesn’t seem to have had a big effect on Ethereum’s price.
In actuality, even though this increased by 4%, it essentially did nothing more than track the increase in the price of Bitcoin, which at the time was up +4.1 percent.
Though ETH’s gain has stayed at +4%, the price of BTC has significantly decreased during the last several hours, bringing the total increase since yesterday to +3%.
Therefore, rather than driving up the price of ETH, the news helped it hold up better.
Despite the fact that the price of Bitcoin has increased by 3.7% during the same time period, the market value, which is currently at $1,650, is exactly the same as it was thirty days ago.
Put another way, since ETH had not increased as much over the previous few weeks, it makes sense that it will now begin to recover somewhat.
Remember that since ETHs based on futures contracts are only collateralized with the contracts themselves rather than the underlying of the futures contracts, they have no actual effect on the price of the underlying.
Another ETF
As a result, both ETFs that mimic the price movement of bitcoin and ETFs that permit simultaneous dual exposure to bitcoin and ether are currently offered on the American markets. Perhaps soon to follow suit will be ones that mirror ETH’s price pattern.
However, there is a different problem with ETFs that are directly collateralized in BTC and ETH; in such a case, the market’s demand could affect the underlying’s price.
It is assumed that the SEC has exhausted all justifications by now for refusing to approve them, even though at maximum it will take all the time possible to delay approval. In any case, it is anticipated that the deadline would end in early 2024.
If these spot BTC ETFs are authorized and successful, they may reduce the amount of Bitcoin available on exchanges, which could lead to a price increase.
There is currently no information regarding spot ETH ETFs, however if those on BTC are allowed, it is assumed that they will also approve those on ETH in the future.
