Ethereum Futures ETFs Hit Record Daily Trading Volume Amid Anticipation of Spot Approvals

The daily trading volume for Ethereum futures exchange-traded funds (ETFs) surged to an all-time high yesterday, fueled by increasing anticipation of potential spot approval from the U.S. Securities and Exchange Commission (SEC).

On Tuesday, Ethereum futures ETFs recorded a trading volume of $47.75 million, a 40% increase from the previous peak of $34.18 million set on March 5, when Ether was nearing the $4,000 mark. This build-up followed a significant spike of $23.67 million on Monday.

New Records From All Corners

ProShares’ Ether Strategy ETF (EETH) led the category, accounting for $43.14 million or 90% of yesterday’s trading volume. VanEck’s Ethereum Strategy ETF (EFUT) and Bitwise’s Ethereum Strategy ETF (AETH) followed, generating $2.6 million and $2.01 million, respectively, according to The Block’s dashboard data.

Despite this new record, the trading volume for Ethereum futures ETFs, which launched in October 2023, remains modest compared to spot Bitcoin ETFs.

The latter debuted in January and amassed a combined trading volume of $2.16 billion on Tuesday, spearheaded by BlackRock’s IBIT with $1.12 billion. 

However, it is noteworthy that spot Bitcoin ETF daily trading volume has significantly decreased since its peak of $9.93 billion on March 5, coinciding with Bitcoin surpassing its previous cycle high of around $69,000.

Grayscale’s Ethereum Trust (ETHE) also saw a substantial rise in trading volume on Tuesday, reaching $684.44 million — the highest since its all-time high of $842.67 million in May 2021. ETHE’s discount to net asset value narrowed to -6.7%, its lowest level in over two years. 

Investors are purchasing discounted shares in anticipation of a potential ETF conversion, reminiscent of the scenario with Grayscale’s Bitcoin Trust (GBTC) before its conversion to an ETF on January 11.

Spot Ethereum ETF Approval Likely Close

The U.S. Securities and Exchange Commission (SEC) has recently requested exchanges to update their spot Ethereum exchange-traded fund (ETF) filings by submitting new Form 19b-4 on an “accelerated basis.” This requirement suggests that the SEC might be leaning towards approving the Ethereum ETF applications by the upcoming deadline, potentially leading to the issuance of the second spot digital asset ETF in the U.S. 

Bloomberg analysts Eric Balchunas and James Seyffart have raised the approval odds from 25% to 75%, while ETF Store president Nate Geraci highlighted the necessity for the SEC to approve both the 19b-4s and S-1s for the ETFs to launch.

Update: @JSeyff and I are increasing our odds of spot Ether ETF approval to 75% (up from 25%), hearing chatter this afternoon that SEC could be doing a 180 on this (increasingly political issue), so now everyone scrambling (like us everyone else assumed they’d be denied). See… https://t.co/gcxgYHz3om

— Eric Balchunas (@EricBalchunas) May 20, 2024

This possible approval is seen as a significant shift in U.S. crypto policy. Variant Fund Chief Legal Officer Jake Chervinsky noted that such an approval would surprise many in Washington, D.C., and could signal a significant policy shift rather than just the introduction of an ETF.

If the spot ETH ETF is approved, it will be a true shock to everyone I know in DC who’s close to this process.

That doesn’t mean it won’t happen.

It means approval could signal a major shift in US crypto policy after the SAB 121 vote, perhaps more important than the ETF itself. https://t.co/ru0iD0GJIC

— Jake Chervinsky (@jchervinsky) May 20, 2024

Notably, Standard Chartered also maintains its bullish prediction of $8,000 for Ethereum (ETH) by 2024, driven by the increasing likelihood of Ethereum exchange-traded fund (ETF) approvals. The bank forecasts that these ETFs could launch in the U.S. this week with 80% to 90% confidence, potentially leading to significant inflows of 2.39 to 9.15 million Ether, translating to $15 billion to $45 billion in the first year.

The renewed optimism surrounding spot Ethereum ETFs has contributed to a 20% rise in Ether’s price since Monday, driving the price to around $3,792. According to Coinmarketcap, ETH is trading at $3,741 at the time of writing.

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