
The Securities and Exchange Commission (SEC) has given the green light to companies like Blackrock, Franklin Templeton, Bitwise, and Invesco to launch their spot Ethereum (ETH) ETFs.Â
This approval came a few months after the agency approved spot Bitcoin ETFs, which have brought in over $17 billion in inflows this year. The iShares Bitcoin Trust (IBIT) has accumulated over $22 billion in assets while the Fidelity Wise Origin Bitcoin Fund (FBTC) has $12.2 billion in assets.
The ETFs that will start trading on Tuesday are Grayscale Ethereum Mini Trust (ETH), Franklin Ethereum ETF (EZET), VanEck Ethereum ETF (ETHV), Bitwise Ethereum ETF (ETHW), 21Shares Core Ethereum ETF (CETH), Fidelity Ethereum Fund (FETH), iShares Ethereum Trust (ETHA), and invesco Galaxy Ethereum ETF (QETH). Grayscale will also convert its ETHE fund into an ETF.
A spot Ethereum ETF is a financial product that lets users to participate in the Ethereum market without holding the real asset. Ethereum backing these assets will be held by custodian companies like Coinbase, Gemini, and Fidelity.Â
These funds are mostly ideal for institutional investors who are often afraid of the lack of regulatory clarity.Â
Retail investors, however, will mostly do well by just buying and staking Ethereum to avoid fees charged by issuers. Staking generates an annual return of about 3.5%. As such, even with the cheapest Ethereum ETF, one will be foregoing about 3.65% in annual returns.
Ethereum was trading at $3,532 as its social media hype rose by 16% in the past 24 hours.Â
The case for spot Ethereum ETFs
Ethereum ETF approval is a sign that the SEC is becoming accommodating to the cryptocurrency industry. In particular, this approval is important because the SEC has previously viewed Ether as a financial security.Â
The ETF approval opens the door for issuers to apply for other proof-of-stake (PoS) ETF approvals. Some of the potential cryptocurrencies that could be targeted are Cardano, Solana, Chainlink, Ripple, and Binance Coin.Â
Ethereum ETFs could do well because the token has a long history of outperforming Bitcoin. For example, it has risen by 1,500% in the past five years while Bitcoin has jumped by less than 600%.Â

In a statement, a top Blackrock executive noted that while Bitcoin derives its value from its rarity, Ethereum does so because of its utility. For example, Ethereum leads in the stablecoin, Decentralized Finance (DeFi), non-fungible tokens (NFT), and Decentralized Public Infrastructure Network (DePIN) industries.
According to DeFi Llama, Ethereum has over $76 billion in stablecoins and almost $60 billion in DeFi assets.
More data shows that Ethereum is the most profitable network in the crypto industry as it made over $1.7 billion this year. Tron has made $890 million in fees this year while Bitcoin, Lido Finance, and Uniswap have made $756 million, $615 million, and $608 million, respectively.

At the same time, as shown below, the volume of Ethereum balances in exchanges has dropped to its lowest point in years. That move, at a time of high demand, could lead to higher prices.

Opportunity cost of investing in Ethereum ETFs
Despite the positive hype, there are a few reasons why many investors may decide to avoid the funds.Â
First, there is a concept known as buying the rumor and selling the fact. Ether has risen for two straight weeks as chances of approval became more apparent. As such, using the buy the rumor and sell the news principle, there is a likelihood that Ethereum will retreat in the coming months. Besides, there is no major catalyst ahead.
Second, investing in Ethereum ETFs means foregoing some returns. First, ETF investors will need to pay an annual fee after the introductory waiver ends. ETH will be the cheapest Ethereum ETF with an expense ratio of 0.15% while the Grayscale Ethereum ETF will have a fee of 2.50%. Fidelity, Blackrock, and Invesco’s expense ratios will be 0.25%.
Therefore, investing $100,000 in ETHE ETF will cost $2,500 in fees while Grayscale’s ETH ETF will cost $150. Over time, these fees will add up. Still, because of its lower fees and long waiver period, the Grayscale Ethereum Mini Trust seems like the best Ethereum ETF to buy since it has a 100 basis points spread with the iShares Bitcoin Trust (ETHA).
At the same time, Ethereum ETFs mean foregoing the monthly staking returns. The average staking return is 3.5%, meaning that a $100,000 investment would bring in $3,500 in almost free money.
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