US Ethereum Spot ETF Launch: Limited Short-Term Impact, Profound Long-Term Significance

On July 23, 2024, the U.S. Ethereum Spot ETF officially launched for trading, coinciding with the 10th anniversary of Ethereum's first public sale. This event holds significant importance for the sustainable development of the crypto world, marking an important step for POS public chains to enter the mainstream financial world. It will attract more developers to join the Ethereum ecosystem, and it paves the way for other public chains like Solana to enter the mainstream world, having substantial significance for the popularization process of the blockchain ecosystem.

However, due to regulatory reasons, staking is currently not allowed for ETFs, and investors holding ETFs will receive 3%-5% less staking mining rewards compared to directly holding Ethereum. Additionally, the understanding threshold for retail investors regarding Ethereum is relatively high, so the short-term impact of this ETF listing on the price of Ethereum may not be as significant as the impact of Bitcoin ETF approval on BTC prices, but it will more likely be reflected in improving the price stability of Ethereum and reducing volatility.

In the short term, the strength of both buyers and sellers is not as strong as that of the Bitcoin ETF, and the impact of the Ethereum ETF is expected to be less than that of Bitcoin:

1. On the sell side: Grayscale's ETHE at $9.2 billion has over 10 times the management fee difference compared to its competitors, which will still lead to early move-out selling, but the scale is expected to be smaller than the outflow impact of GBTC. Grayscale has split 10% of its net assets to establish a low-fee mini ETF during the conversion process, which has alleviated the pressure of fund transfer to some extent caused by high fees.

2. On the buying side: The public consensus on Ethereum is far less than that of Bitcoin, and the asset allocation momentum is smaller than that of the BTC Spot ETF. From the perspective of Google search popularity and seed fund size, the attention for Ethereum ETF is noticeably lower than that of Bitcoin ETF.

3. The demand for buying within the crypto circle is basically nonexistent: Due to the lack of on-chain 3%-5% basic staking yield for ETFs, the appeal to crypto investors is not significant.

In the long term, the Ethereum ETF has paved the way for other crypto assets to integrate into the mainstream world:

1. Ethereum, as the largest public chain in terms of scale, has had its Spot ETF approved, which is an important step for public chains to integrate into the mainstream financial world.

2. From the SEC's approval standards, Ethereum meets the requirements in terms of anti-manipulation, liquidity, and pricing transparency. In the future, more qualified crypto assets may enter the public investors' view through ETFs.

3. Public chains like Solana also meet relevant criteria to a certain extent, and some institutions have submitted applications for Solana Spot ETF.

Overall, the impact of the Ethereum ETF on coin prices may be limited in the short term, but it will promote the integration of the crypto ecosystem with the mainstream world in the long term. The cognitive differences between new and old participants in this process may become the core factors influencing cryptocurrency price fluctuations and creating investment opportunities in the next 1-2 years. As more crypto assets enter mainstream asset allocation through forms such as ETFs, and traditional financial assets are also tokenized on-chain through RWA, the efficient circulation of global financial assets will gradually be realized.