Fundstrat exec says sentiment around Ethereum ETF ‘too bearish’

June 28, 2024 at 8:03 am

Edited by Dorian Batycka

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Fundstrat exec says sentiment around Ethereum ETF ‘too bearish’

Although Ethereum has outperformed Bitcoin in returns since the beginning of the year, investors still seem to remain bearish on its ETF.

While trading in spot Ethereum exchange-traded funds (ETFs) has not yet started, Bloomberg reports that investors are already demonstrating a “bearish” sentiment towards the second-largest cryptocurrency, citing Fundstrat’s Head of Digital Asset Strategy, Sean Farrell.

In a note, Farrell highlighted that despite the negative sentiment, hedge funds could still provide a significant boost to these ETFs by capitalizing on basis trade opportunities — the discrepancies between the spot and futures markets. Fundstrat Global and Galaxy Digital project that spot Ethereum ETFs could attract $5 billion in net inflows within the first five months, though Galaxy Digital cautions that the lack of staking in the ETFs could impact demand.

Despite the bearish outlook, the approval of spot Ethereum ETFs could mark a pivotal milestone for the broader crypto industry as VanEck has recently signaled its intention to launch another spot ETF, this time for Solana.

Fundstrat exec says sentiment around Ethereum ETF 'too bearish' - 1 — ETF Possibility Score | Source: GSR Markets

Analysts at GSR Markets, one of the oldest crypto market makers, project that the introduction of spot Ethereum ETFs could pave the way for more top-100 cryptocurrencies to enter traditional markets. Based on decentralization and demand, GSR Markets anticipates that once Solana receives approval for its ETF, investment firms will likely file for spot ETFs for NEAR Protocol (NEAR), Avalanche (AVAX), Aptos (APT), and others.

However, the timeline for the U.S. Securities and Exchange Commission (SEC) to approve these filings remains yet to be seen. Reuters, citing its own sources, reports that the SEC could approve spot Ethereum ETFs as soon as Jul. 4. Meanwhile, Bloomberg senior ETF analyst Eric Balchunas indicated that spot Solana ETFs are unlikely to be approved before 2025.

Since the beginning of the year, Ethereum’s price has surged by approximately 51%, outpacing Bitcoin by 6%, and Solana by 13%, according to data from MarketWatch.