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Monthly Market Review - September 2023

This update will briefly examine the recently launched Ethereum (ETH) Futures-based ETF, its implication for the upcoming Bitcoin Spot ETF, and the SEC’s continued struggles.



Price (1 September 2023)



Price (30 September 2023)



% Return



On October 2, nine USA-based ETH Futures funds were launched by ProShares, VanEck and others. These products are linked to derivatives of Ethereum and won’t hold the underlying asset as no spot-based ETFs are yet approved by the SEC. These ETH futures are the same structure as the Bitcoin-based futures ETFs launched on 20 October 2021; comparing the launch of the two products gives us a good benchmark for where we are in the cycle.


In October 2021, at the peak of the bull market, when the Bitcoin-based ETF launched, it grew to over $1 billion of assets within its first two days of trading. On the other hand, the ETH-based products only had a trading volume of less than $7 million on their first day of trading and less than $13 million in assets in their first week. This can be compared with the exchange-traded products in Europe, where the ETH products hold EUR1.1 billion, compared with EUR2.6 billion of Bitcoin ETPs. This could suggest ETH products are about 40% as popular as Bitcoin products when one looks at products which have traded longer. Therefore, it’s clear that there isn’t a thousand times less demand for Ethereum in the broader market. Rather, the weak launch and poor trading volume show how subdued the current market is and how many participants cautiously wait for more positive price action before entering the market. In our view, this launch is further proof of how reflective digital assets are: when the price is high, everybody is rushing to own it and when the prices fall, so does the activity.


On the regulation side, the SEC continues to struggle to defend its anti-digital asset stance. In July, Ripple Labs had a significant victory against the SEC. In the ruling, the courts declared that XRP wasn’t a security; in September, the SEC attempted to appeal this ruling but was denied that appeal pending its other cases against Ripple. Practically, that means that XRP’s status as an asset exempt from SEC oversight is secure for at least another 12 months. Realistically, by then, there will be a new chair of the SEC, who may have a softer stance on digital assets.


Coinbase and the SEC are also locked in a legal battle, with Coinbase asking the courts to dismiss the SEC’s claim that it sold unregulated securities. This case is ongoing, but its outcome is critical for the space, and we are watching it closely. A positive ruling will open up the digital asset industry as it will allow more US companies to trade digital assets safely. Additionally, legal clarity will allow spot ETFs of more digital assets to launch, which would be helpful for the smaller digital assets.


On ETFs, the SEC delayed the applications of the Bitcoin Spot ETFs again; however, this hasn’t dampened the enthusiasm of Blackrock and the other large institutional applicants. Steven Schoenfield, a former managing director at Blackrock, indicated that he believes approval is three to six months away. He believes it would lead to $150-$200 billion worth of inflow over three years, which is roughly 30-40% of the current market capitalization and can easily result in positive reflective price action as these are such reflective assets.


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