First US Ethereum Spot ETF Application Submitted, Will ETH Rise in the Future？

Recently, Ark Invest and 21 Shares submitted an application to the U.S. Securities and Exchange Commission (SEC) for an ETF called "ARK 21 SHARES ETHEREUM ETF." This is the first Ethereum spot ETF to be filed in the United States, though it is not the first globally. As early as 2021, Canada had already approved the trading of an Ethereum spot ETF for Canadian investors.

The application documents for ARK 21 SHARES ETHEREUM ETF.

The application for ARK 21 SHARES ETHEREUM ETF is an Exchange-Traded Fund (ETF), which is an investment fund listed and traded on a stock exchange. An Ethereum spot ETF tracks the price of Ether (ETH), allowing investors to trade the fluctuations in ETH price indirectly, rather than directly holding or trading ETH.

According to a report by Bernstein on September 4th, the launch of an Ethereum spot ETF is expected since "the market structure of Ethereum is similar to that of the CME futures market and spot market." Furthermore, it presents a significant business opportunity for asset management firms to earn healthy fees in this emerging asset class.

It can now be understood why financial institutions like BlackRock and Bitwise persist in applying for BTC spot ETFs even after being rejected by the SEC. It is primarily due to the potential fee income generated from the trading activity. Similarly, if an Ethereum spot ETF is approved, the issuer will also profit from it.

Aside from benefiting the issuers, what are the advantages of BTC and ETH spot ETFs for investors? Bloomberg ETF analyst Eric Balchunas believes that if the US SEC gives the green light for BTC spot ETFs, the $30 trillion worth of assets controlled by US financial advisors could potentially flow into Bitcoin investments.

What does $30 trillion represent? Currently, the total market capitalization of the entire cryptocurrency market is only around $1 trillion, with BTC accounting for roughly 50%, which is less than $0.5 trillion. Once the gate opens, the prices of Bitcoin and the entire cryptocurrency market are likely to rise. It should be noted that whether it's BTC or ETH spot ETFs, they will bring new capital to the cryptocurrency market, which is a long-term positive development.

Currently, the price trend of ETH is relatively weak, hovering around $1,600 with volatility, awaiting positive news for a boost. In the second half of the year, a significant positive catalyst would be the approval of ETFs. If they can pass or if the SEC signals a positive stance, the market is likely to experience a decent rebound.

ETH daily price chart, source: TradingView.

In the current market situation, the lack of positive stimuli continues, and the possibility of bearish selling pressure is high. Moreover, there is not much resistance during downward movement, so we cannot rule out the possibility of ETH testing $1,000 before the end of the year.