Crypto ETFs are a new way to invest in cryptocurrencies easily. Recently, the US SEC has approved the sale of spot Ethereum ETFs, which highlights Ethereum's growing acceptance. With the approval of spot Ether ETFs, investors now have a straightforward means to gain exposure to Ethereum's performance without the complexities associated with directly purchasing and storing cryptocurrencies. Let’s look at the top Ethereum ETFs to watch in 2024.
21Shares Ethereum Staking ETP (AETH)
The 21Shares Ethereum Staking ETP (AETH) is an innovative investment product that lets you invest in Ethereum (ETH) and earn extra returns through staking. Staking is locking up your cryptocurrency for a certain period to support a blockchain network and earning more cryptocurrency in return. AETH is fully backed by Ethereum.
Managed by 21Shares AG, a top provider of cryptocurrency products, AETH gives you exposure to Ethereum's market performance while also generating staking rewards, similar to earning interest in a savings account.
CI Galaxy Ethereum ETF (ETHX.B)
The CI Galaxy Ethereum ETF (ETHX.B) is run by CI Global Asset Management, with Galaxy Digital Capital Management LP as the subadvisor. ETHX.B is a Canadian-based spot ETF that gives you direct exposure to Ethereum by holding actual Ethereum tokens. When you invest in ETHX.B, you're buying shares of an ETF that owns Ethereum directly, not derivatives or futures. This way, you can benefit from Ethereum's performance without having to buy or store the cryptocurrency yourself.
Regarding investing directly in Ethereum, ETHX.B is a smart choice. It’s backed by Ethereum and follows its spot price, making it a reliable option for cryptocurrency investors.
XBT Provider Ethereum Tracker One (COINETH)
XBT Provider's Ethereum Tracker One (COINETH) is a top Ethereum ETP with nearly $400 million in assets, making it one of the largest Ethereum-backed ETPs worldwide. COINETH aims to match Ethereum's performance in USD and also reflects the USD/EUR exchange rate for EUR-denominated certificates. This spot-based Exchange-Traded Note closely follows Ethereum's price without using futures contracts. When you invest in COINETH, you own shares backed by actual Ethereum, offering a direct way to gain exposure to Ethereum's market price.
Traded on a stock exchange, COINETH is easily accessible through brokers and banks. Its transparency and reliability are enhanced by proof of reserves from external auditors, ensuring it is fully backed by Ethereum holdings.
Purpose Ether ETF (ETHH)
The Purpose Ether ETF (ETHH) is the world's first Ether ETF that settles physically, offering investors a simple way to own Ether in their investment portfolios. Managed by Purpose Investments, ETHH provides exposure to Ethereum by directly holding the cryptocurrency. This means your investment is directly linked to the real market price of Ether.
ETHH securely stores 100% of its Ether offline in "cold" storage, which is disconnected from the internet to prevent hacking. Only a small portion is kept in an online "hot" wallet for temporary transactions.
Grayscale Ethereum Trust (ETHE)
Managed by Grayscale Investments, ETHE lets you participate in Ethereum's potential market growth. Currently, it holds over $10.1 billion in assets. Investing in ETHE means you don't have to handle the complexities of owning and securing Ethereum directly. ETHE allows you to invest in Ethereum without dealing with the cryptocurrency itself.
It's not like a regular ETF but more like a trust that holds Ethereum. The value of ETHE shares depends on Ethereum's current price, and investors own shares representing a part of the Ethereum held by the trust.
Upcoming Ethereum ETF applications.
BlackRock Spot Ethereum ETF: BlackRock wants to make it easier for investors to buy Ethereum directly if the SEC approves their application.
Grayscale Ethereum Spot ETF: Grayscale wants to switch from trading Ether futures contracts to holding actual Ether in an ETF, which would be a big change for them.
Hashdex Ethereum ETF: Hashdex wants to create an ETF that owns real Ethereum, which could make it easier for more people to invest.
Invesco and Galaxy Digital’s Ethereum ETF: This application is for an ETF that directly holds Ethereum, showing how interest in regulated crypto investments is growing.
Key Considerations When Choosing an Ethereum ETF for Investment
Expense Ratio and Liquidity: Check the Total Expense Ratio (TER) and how much money the fund has. More liquidity and a larger fund size usually mean it's easier to buy and sell shares.
Tracking Method and Investment Strategy: Understand how the ETF follows Ethereum's price and how it invests. Different ETFs use different methods, which can affect your investment goals.
Performance: Look into the company that manages the ETF and how well it has performed in the past to see if it's reliable and could give good returns.
Currency and Exchange: Think about what currency the ETF is in and which exchange it's listed on. This can affect currency risks and how easy it is to trade.
Regulation and Risks: Make sure the ETF follows strong regulations and considers the risks involved, like market and regulatory risks.
Conclusion
With big names getting approval for crypto ETFs, Ethereum ETFs might catch more attention from investors worldwide. Ethereum plays a key role in dApps, blockchain technology, and areas like Web3, NFTs, and DeFi, showing it could grow a lot and investors would be able to invest in it confidently.