the ETF battle is about to begin

The arrival of digital assets such as bitcoin (BTC) and ether (ETH), Ethereum’s native cryptocurrency, to Wall Street through spot ETFs marks a new beginning for the entry of new investors, especially the most traditional ones, to the world of crypto assets.

While bitcoin ETFs started with an advantage in this market, the approval of ether ETFs supposes the presence of an opponent who could give him a fight.

Ether is the second cryptocurrency by market capitalization behind bitcoin. Additionally, its network is a broad source for developing decentralized applications (dapps), digital tokens, smart contracts, exchanges, non-fungible tokens (NFTs), play-to-earn games, metaverses, decentralized autonomous organizations (DAOs), and lending platforms. .

All these elements that Ethereum encompasses and the money invested there will come into play once the ether funds go public.

Ethereum ETFs will have to face bitcoin-based funds whose performance has been among the most successful within this type of financial products on the United States stock exchanges.

The good execution and records of bitcoin ETFs have been led by the fund of the giant asset manager BlackRock, iShares Bitcoin Trust (IBIT), accompanied by others such as Fidelity Wise Origin Bitcoin Fund (FBTC) or ARK 21Shares Bitcoin ETF (ARKB) .

In total, bitcoin ETFs as a whole have generated total receipts of $13.43 billion since its launch in January. For now, the ether funds are still waiting to start his career.

Ethereum ETFs must continue to navigate the regulatory path

The United States Securities and Exchange Commission (SEC) approved 19b-4 filings for eight companies that want to issue ETH-based funds. 19b-4s are exchange rule change requests; In this case, the Cboe, Nasdaq and NYSE exchanges request permission to list and market these financial products.

In the next step, the SEC must approve S-1 issuer registration statements. This is something that is not defined when it will happen, but the regulator will probably wait until all the proposals are aligned to launch the funds at the same time, just as happened with bitcoin.

Bloomberg analyst James Seyffart said that approval from the SEC will take some time. He estimates that it could take approximately one to two weeks.

Eric Balchunas, also a Bloomberg analyst, sees authorization a little further away. He estimates that the answer could be given by the middle of next June, as reported by CriptoNoticias.

Companies like VanEck submitted the S-1 filing last week with the goal of speeding up the approval process.

After they are issued and can be listed on the stock exchange, it will remain to be seen whether ether ETFs will take market share from bitcoin ETFs or whether the two will complement each other.

Analysts have divided opinions on the scope of ether ETFs

For Nate Geraci, a specialist in the area of ​​exchange-traded funds, the approval of Ethereum ETFs is “much more important” than the approval of bitcoin ETFs. He says this because he believes that on the part of the regulators there was a “complete capitulation on cryptocurrencies.”

The approval of ether exchange-traded funds follows the change in position of the Joe Biden administration, whose government has been a little more open towards the cryptocurrency ecosystem.

The change occurs in a political context marked by current expectations regarding the presidential elections that will be held next November. The intention seems to be to attract the young vote, a group that identifies with cryptocurrencies, in addition to the large investors who already participate in the industry.

Geraci believes that after the decision made by the SEC “there is no turning back.” Ethereum ETFs They can become the gateway for other cryptocurrencies to the US stock exchanges and in a legitimation for them.

Analysts such as Bernstein’s Gautam Chhugani and Mahika Sapra of the financial advisory company Bernstein have raised the possibility that digital assets such as Solana (SOL) and XRP from the Ripple company may be considered for the creation of new financial instruments of this type. They consider that the possibility is open because they believe that SOL is a cryptocurrency similar to ETH.

Just as optimistic as Geraci is the British bank Standard Chartered, which estimates that ether funds could generate inflows in their first 12 months of between $15 billion and $45 billion, a not inconsiderable figure.

Just as some have good projections for these new financial products, they also There are those who do not foresee such a positive outlook.

Michael Saylor, founder and director of software services company MicroStrategy, believes investors could allocate between 5% and 10% of their capital to the Ethereum ETF, but bitcoin will make up 60% to 70% of that allocation. That is, for Saylor, the battle that has not yet begun would be lost for Ethereum.

In a similar line of thought, the aforementioned Eric Balchunas thinks that Ethereum ETFs will get just 10% to 15% of assets held by bitcoin ETFs today. That means they would have a significantly smaller share of assets than bitcoin funds.

The specialist points out a challenge that new financial products could have. It is about how they are going to penetrate the world of the so-called “boomer” generation. These are people who are between 50 and 75 years old. He mentions this because There are a considerable number of investors who fall into that demographic.

Balchunas is convinced that, in the case of bitcoin, it is easy to understand for these investors, since the digital currency is often compared to gold, which is why they call it digital gold. So he wonders, is there a simple phrase like that for ether?

In short, nothing is written, much less in a world as changing as that of cryptocurrencies. But so farbitcoin ETFs look strong to face the coming fight.