Ethereum Sees Trading Uptick with New ETF Launch and Growing Tokenization on Its Blockchain
Summary:
Ethereum's primary token, Ether, is seeing minor gains largely due to the launch of an Ether futures-linked exchange-traded fund (ETF) on standard stock exchanges and growing use of the Ethereum network for tokenized assets. Despite initial mixed responses, ETFs are offering a regulated investment platform for traditional institutions. Additionally, Swiss bank UBS has initiated a tokenized assets pilot on the Ethereum blockchain, strengthening investor faith in Ethereum's smart contract handling capabilities and safety standards. Amidst market instability, Ethereum enthusiasts are optimistic about new traditional stock market investment routes and a growing scope for tokenizing real-world assets on the Ethereum blockchain.
Ether (ETH), the primary token for Ethereum, saw minor gains on Oct. 2, attributed to eager institutional investors reacting to the revelation of an Ether futures-associated exchange-traded fund (ETF) on standard stock exchanges. Traditional financial institutions employing the Ethereum network for actual tokenized assets (RWA) also had a beneficial effect on investor confidence. In the period between Oct. 1 and Oct. 2, Ether showed a 1.1% growth, pushing its value toward the $1,700 obstruction point, a level not seen in a month.
Concerning the launch of Ethereum futures ETF tools by companies like VanEck, ProShares, Valkyrie, and Bitwise, Bloomberg's senior ETF analyst Eric Balhunas expressed dissatisfaction with the initial trading numbers via a post on the X social network (previously known as Twitter).
BTC and ETH futures ETFs account for 64% of the trading volume in these futures tools. While VanEck chose the Chicago Board Options Exchange (CBOE) for listing its products, ProShares and Bitwise opted for the New York Stock Exchange. Despite initial reserved responses, ETFs are deemed a welcome addition to the crypto scene as they offer a fully regulated investment platform for institutions lacking earlier access to crypto markets.
Swiss banking giant UBS on Oct. 2 declared the commencement of a tokenized assets pilot on the Ethereum blockchain, an initiative led by Singapore's central bank, with UBS Asset Management releasing tokens symbolising parts of a money market fund. This advancement strengthened investor faith in Ethereum network's smart contract handling capabilities and safety standard, reflecting in an uptake of Ether prices. This growing use of Ethereum upholds a superior valuation for its main token as necessary for transactions on the network.
Crypto asset management firm Grayscale has lodged a request to the U.S. Securities and Exchange Commission (SEC) regarding converting its Ethereum Trust into a spot Ethereum ETF. Grayscale's Ethereum Trust (ETHE), with a net asset value of $4.9 billion equating to 2,981,563 ETH within its architecture, was originally introduced in March 2019.
Investment trusts like ETHE are legally established as companies and classified as "closed-end funds." This means that issued shares are limited and their price is largely aligned with supply and demand. This often leads to a substantial price difference compared to the inherent value of ETH fractions in the trust.
As of Oct. 1, Ethereum's price boost coincided with a $23 million liquidation of short positions in Ether futures contracts. This led to a short-lived peak of $1,755 on Oct. 1, the highest in 45 days. A subsequent correction to $1,680 on Oct. 2 prompted the liquidation of $10.8 million in long positions, creating market instability.
Ethereum fervents now have reasons for optimism, thanks to a new traditional stock market investment pathway and the growing scope for tokenizing real-world assets on the Ethereum blockchain.
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Published At
10/2/2023 8:18:21 PM
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