Ethereum Spot ETF Officially Logs in to the US Market: Limited Short-Term Impact, Profound Long-Term Significance

On July 23, 2024, the U.S. Ethereum Spot ETF officially began trading, coinciding with the tenth anniversary of Ethereum's initial public offering. This milestone event is of significant importance for the future development of the cryptocurrency industry, marking the formal entry of proof-of-stake based public chains into mainstream finance. This will attract more developers from diverse backgrounds to join the construction of the Ethereum ecosystem, while also paving the way for other blockchain projects like Solana to enter the mainstream market, promoting the popularization of blockchain technology.

However, due to regulatory restrictions preventing ETFs from participating in staking, investors will not be able to obtain staking yields of 3%-5%. Additionally, since general investors have less understanding of Ethereum compared to Bitcoin, it is expected that the short-term impact of the Ethereum ETF on ETH prices may not be as significant as the impact of the Bitcoin ETF on BTC prices. Nevertheless, the launch of the ETF is expected to enhance the stability of Ethereum prices and reduce volatility.

In the short term, the influence of the Ethereum ETF on both buyers and sellers is not as strong as that of the Bitcoin ETF. In terms of selling pressure, the significantly higher management fee rate of Grayscale Ethereum Trust (ETHE) compared to its competitors may trigger a certain degree of capital transfer. However, since Grayscale has also launched a low-fee mini ETF, this may alleviate the outflow pressure to some extent. In addition, the discount of ETHE has converged in advance, and the pressure from the closing of arbitrage positions is expected to be less than that of GBTC.

In terms of buyer demand, compared to Bitcoin, ordinary investors have a lower awareness and consensus regarding Ethereum. As a complex ecosystem, the supply and value assessment of Ethereum can be difficult for ordinary investors to understand. Therefore, for investors who are optimistic about cryptocurrencies, they may be more inclined to choose the supply-scarce Bitcoin ETF with less competition.

From the perspective of Google search popularity and the size of ETF seed funds, the popularity of Ethereum ETF is clearly lower than that of Bitcoin ETF. For investors within the cryptocurrency circle, holding Ethereum directly may be more attractive as the ETF cannot earn staking rewards.

In the long run, the approval of the Ethereum ETF paves the way for other crypto assets to integrate into the mainstream financial system. Ethereum meets regulatory requirements in terms of preventing market manipulation, liquidity, and pricing transparency. In the future, more eligible crypto assets may enter the ordinary investors' view in the form of ETFs.

Overall, while the short-term impact of the Ethereum ETF may not be as significant as that of the Bitcoin ETF, it marks a further integration of the crypto ecosystem with traditional finance. The cognitive differences during this process may become key factors influencing cryptocurrency price fluctuations and creating investment opportunities in the next 1-2 years. As more crypto assets enter mainstream allocations, and traditional financial assets also enter the crypto world through tokenization, we are witnessing an increase in the efficiency of global financial asset circulation and the formation of a new financial system.