As announced on September 5, Monochrome Asset Management has applied to list an Ethereum exchange-traded fund (ETF) on CBOE Australia under the ticker symbol IETH.
The ETF aims to provide retail investors with a regulated way to gain exposure to Ethereum, and it is a dual-access fund, meaning investors can request redemptions in cash or in kind.
The company expects a decision on its application by the end of this month.
If approved, IETH will expand regulated crypto investment options for Australian investors. Notably, this follows the launch of Monochrome Bitcoin ETF (IBTC), which became Australia's first ETF to directly hold Bitcoin.
According to the company's website, IBTC's Bitcoin holdings were valued at $11.3 million as of Sept. 4.
Ethereum ETF faces challenges
Monochrome's plans for an Ethereum ETF come as similar products in the United States face difficulties.
The U.S.-traded spot Ethereum ETF recorded negative net inflows of $476 million in its first month of trading, mainly due to outflows driven by Grayscale’s ETHE.
Market observers attribute this poor performance to Bitcoin’s first-mover advantage, a lack of staking options for Ethereum ETFs, and declining liquidity in the Ethereum market, making these products less attractive to institutional investors.
Quinn Thompson, founder of crypto hedge fund Wrecker Capital, highlighted the stark contrast between early inflows into Bitcoin and Ethereum, noting that while Grayscale's outflows have slowed, there hasn't been significant interest or inflows into other Ethereum ETFs to offset the outflows.
Additionally, ETHE’s overhang was smaller than GBTC’s, in part due to forced sales by bankrupt companies.
Thompson noted that the Ethereum ETF performed even worse when taking into account the headwinds faced by Bitcoin, adding:
“At the current valuation, there is simply no demand for ETH from smart money/traditional investors/whatever you want to call it.”
But Eric Balchunas, senior ETF analyst at Bloomberg, doesn't think the outflows will last forever: He expects inflows into newly launched ETFs to eventually offset the current outflows.
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