Grayscale CEO Michael Sonnshein believes that after the first Bitcoin ETF has been approved, an Ethereum ETF will follow sooner rather than later.
Bitcoin ETF paving the way for an Ethereum ETF?
Bitcoin bulls had been waiting for years, but the SEC recently finally approved the launch of a Bitcoin Futures ETF, marking the coming-of-age for the cryptocurrency. However, crypto advocates are now wondering how quickly an Ethereum ETF is to follow?
If Grayscale CEO Michael Sonnenshein is to believed, it will follow pretty soon. Although the first Bitcoin ETF took eight years to be approved (several applications had been slapped down over the years), logic dictates that the second-biggest cryptocurrency would not take as long. Sonnenshein said so on CNBC’s Squawk Box when talking about the approval of the ProShares Bitcoin Futures ETF. He stated that approving the ETF was a signal that the cryptocurrency market was going in the right direction. This possibly indicated that the Securities and Exchange Commission was getting more relaxed about trading cryptocurrencies like traditional assets. He added that after the approval of a Bitcoin ETF, an Ethereum ETF would only be a matter of time since Ethereum, despite its significantly lower market cap, has seen comparable and sometimes even bigger trading volumes than Bitcoin on cryptocurrency exchanges.
Of course, Ethereum ETF applications had been filed in the past but to no avail thus far. Both ProShares, the fund behind the first Bitcoin ETF, and VanEck have seen their Ethereum ETF applications get declined. That may not necessarily indicate rejection on the part of the SEC, but rather suggests that Bitcoin ETF applications are being prioritized at the moment.
Grayscale interested in Bitcoin Spot ETF
The first Bitcoin ETF that received approval was a futures ETF, meaning that investors are speculating not on bitcoin itself but on a contract that gives them the right to purchase bitcoin at a certain expiry date (a futures contract). However, Bitcoin advocates have long been in favor of a spot ETF over a futures ETF. A spot ETF would be backed by real bitcoin, of which there are only 21M, meaning it would have a significant impact on the demand for bitcoin. On the other hand, a futures ETF is backed by a derivative (the contract that allows the purchase of bitcoin). Therefore, the futures price and the spot price of bitcoin can diverge, and Bitcoin bulls fear that futures ETFs might expose Bitcoin to price manipulation, something that a spot ETF would not do.
Either way, Grayscale has shown interest in filing a Bitcoin spot ETF and has converted its futures application into a spot ETF application. In response to growing competition, the fund did this after ProShares saw its Bitcoin Futures ETF approved for trading on the NYSE. Also, a spot ETF could be a superior offering to a futures ETF since investors would lose out on gains due to growing contango when the futures contracts expire at a higher price than the spot price. However, the SEC has not given a spot ETF the green light as of today.