Investors are eager for an Ethereum ETF after the success of Bitcoin ETFs in January
Bitwise has applied for a spot Ethereum ETF, but approval might take until December.
Matt Hougan, Bitwise CIO, argues a rushed May launch isn't ideal.
The December timeframe allows traditional finance to adjust to Bitcoin ETFs before an Ethereum ETF launch. This could lead to smoother adoption.
Despite the wait, a successful Ethereum ETF launch is expected to be a major milestone for the crypto market.
The spot Bitcoin ETFs have been here for nearly three months, and investors still eagerly await the arrival of newer investment vehicles.
Considering the billions of dollars that have flowed into the Bitcoin ETFs so far, the crypto community eagerly awaits the launch of newer ETFs on other cryptocurrencies, with Ethereum being the biggest by far.
Very recently, Bitwise has joined the fray of asset managers lobbying for an Ethereum ETF.
And in a surprising turn of events, despite the company's most recent filing, its investment chief, Matt Hougan has just expressed expectations that we might be seeing an Ethereum ETF not in May—but much later in December 2024.
As mentioned, Bitwise recently applied with the U.S. SEC to offer a spot Ether ETF when the time comes.
This comes after the successful launch of 11 spot Bitcoin ETFs on 11 January this year, and their subsequent success according to data from Farside.co (total inflows of around $12 billion).
Biwise’s ETF proposal is called the “Bitwise Ethereum Trust”, and is set to directly hold Ethereum, allowing investors to gain exposure to the cryptocurrency by proxy.
Moreover, considering how Ethereum is a proof-of-stake blockchain, the Bitwise Ethereum Trust might even leverage staking services offered by some of the largest custodians, allowing investors to earn rewards from just owning these ETFs.
In essence, by combining direct ownership of Ethereum with staking, Bitwise aims to enhance returns for investors.
There might be some issues with the entire plan though, when it comes to timing.
According to a new Forbes interview with Bitwise's Chief Investment Officer (CIO), Matt Hougan has expressed optimism about when and how an Ethereum ETF is set to happen.
However, instead of the May deadline industry spectators seem to be capitalizing on, Hougan prefers a December approval over a hasty launch in May.
Hougan in the interview, remains cautious of a May approval, which he describes as "hasty". The Bitwise CIO acknowledged that an approval in May is possible, but not very likely.
“We think that’s a natural pathway that crypto investors have followed for 15 years. They start with Bitcoin and then they want exposure to other things. I think Ethereum will be very attractive. I think the [Ethereum] ETFs will be more successful if they launch in 12 months than if they launch in May.”
In essence, he maintains that patience might be a virtue and that by waiting until December, Bitwise (and the others) can position themselves more strategically.
Hougan also mentioned the much-hyped Dencun upgrade that went live on 13 March.
He emphasized that the Dencun upgrade has not received the spotlight it deserves and that investors remain fixated on Bitcoin.
This makes it difficult for Ethereum to break through, and truly make an impact if we do see this ETF approval in May.
Moreover, Hougan says that a “gradual” adoption pattern with these ETFs might be the way to go because there might not be much sense in simply rushing from Bitcoin ETFs into Ether ETFs.
Hougan advocates for allowing Traditional Finance (TradFi) platforms like banks, brokers and others to properly digest the Bitcoin ETFs, preparing the ground for an Ethereum launch.
And as it stands, waiting until December for this to happen might be the way to go about this.
If these traditional investors are given time to accept Bitcoin and crypto via the Bitcoin ETFs, they will be more receptive to Ethereum
Hougan’s outlook aligns with a February prediction from Bitwise’s Ryan Rasmussen in February.
In a Yahoo Finance interview, Rasmussen predicted that we might be looking at a 50-50 chance of approval for a Spot Ether ETF by May.
This means that if both of these experts are right, we might have to wait a little longer than May to see an Ethereum ETF.
In total, while the industry continues to wait for the final approval of these ETFs, the role of patience and timing cannot be dismissed.
Whether it’s May or December, the arrival of an Ethereum ETF promises to be a significant milestone for investors worldwide.
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