The price of the second-largest cryptocurrency by market capitalization Ethereum ($ETH) has over the last 24-hour period surged over 6.7% to surpass the $2,000 mark after BlackRock’s iShares signaled a potential upcoming Ethereum exchange-traded fund (ETF) filing.
As first reported by a user Summers on the microblogging platform X (formerly known as Twitter), BlackRock recently registered the iShares Ethereum Trust in Delaware, which implies the firm is looking to issue a spot Ethereum ETF in the United States.
The user pointed out that BlackRock’s iShares Bitcoin Trust was registered just seven days before the world’s largest asset manager filed a spot Bitcoin ETF application with the U.S. Securities and Exchange Commission (SEC).
As CryptoGlobe reported, BlackRock’s filing saw major financial powerhouses that collectively manage an astounding $27 trillion start making inroads into the world of Bitcoin and cryptocurrency after a race to list the first spot Bitcoin ETF in the US kicked off from it.
The $27 trillion figure, it’s important to point out, represents a grand total of assets under management across the aforementioned institutions, and only a minuscule fragment of this gargantuan sum is anticipated to be channeled into cryptocurrency investments.
Ethereum futures ETFs have been traded in the US since last October, but their trading volume has seen somewhat lackluster.
A spot Bitcoin or Ethereum ETF, however, is a type of exchange-traded fund that directly holds Bitcoin or Ethereum as its underlying asset, meaning that the value of the ETF is closely linked to the current market price of Bitcoin or Ethereum, and investors can benefit from the price appreciation of the cryptocurrency without having to buy, store, or manage it themselves.
A spot ETF also often has lower fees and expenses than a futures ETF, since it does not need to pay for the costs of rolling over futures contracts or hedging against price fluctuations. A futures Bitcoin or Ethereum ETF invests in Bitcoin or Ethereum futures contracts, which are agreements to buy or sell the cryptocurrency at a predetermined price on a set future date.
This means that the value of the ETF is influenced by the expectations of the future price of Bitcoin or Ethereum, rather than its current market price. A futures ETF can diverge from the spot price of the cryptocurrency due to factors such as contango, backwardation, leverage, and liquidity while having higher fees.
Featured image via Unsplash.
