Best Ethereum ETFs to Watch in 2024

The US SEC just approved spot Bitcoin ETFs and sent the global financial markets into a tizzy, helping cryptocurrencies leap into legitimacy as an investment class. However, the recent enthusiasm surrounding the news soon led to speculation about spot Ethereum ETF approvals in the US market. These are exciting times for investors the world over - we're at a juncture where traditional finance and digital assets are converging, offering exciting opportunities for investors.

Ethereum, the second-largest crypto by market cap and hosting the most extensive ecosystem for decentralized applications (dApps), has recently seen a notable uptrend. This growth has rejuvenated the enthusiasm of crypto enthusiasts globally. A key event in this scenario is BlackRock's application for an Ethereum ETF, a move that has electrified the investment community. As the world's largest asset manager embraces Ethereum, it signals the cryptocurrency's growing prominence in the financial sector. This development could be pivotal in bringing Ethereum, and by extension, the crypto market, into the mainstream investment landscape.

Source: X (formerly Twitter)

In this article, we delve into the most significant Ethereum ETFs that are capturing attention, even as crypto enthusiasts await the SEC nod for spot Ethereum ETFs in the US. This includes both established funds and those on the horizon worth watching. Discover the top Ethereum ETFs in the market, learn how to select the best ETH ETF, and understand how to invest in an Ethereum ETF effectively to capitalize on its potential.

If you want to go the ETF way to invest in Ethereum, here are the best ETH ETFs you can consider as of January 2024:

Dive deep into the world of Bitcoin ETFs.

Grayscale Ethereum Trust (ETHE) 

The Grayscale Ethereum Trust (ETHE) is one of the notable investment vehicles for gaining exposure to Ethereum. The fund is backed by Grayscale Investments, LLC - a subsidiary of Digital Currency Group. The trust is based in the United States, with shares registered under Section 12(g) of the Securities Exchange Act of 1934. 

The Grayscale Ethereum Trust provides investors with an opportunity for exposure to Ethereum without needing to buy, store, and keep Ethereum directly. The trust is solely and passively invested in Ethereum, offering investors an indirect way to participate in the potential of the Ethereum market.

The Grayscale Ethereum Trust (ETHE) is neither a spot nor a futures product in the traditional sense. It is a trust that holds Ethereum directly. Investors in the trust own shares representing a portion of the Ethereum held by the trust. This means that the value of ETHE shares is linked to the current, or "spot," price of Ethereum, although it does not allow for direct trading of Ethereum itself. Grayscale has expressed intentions to convert ETHE into an ETF (Exchange-Traded Fund), which would be backed by spot holdings of Ethereum if approved. 

The Grayscale Ethereum Trust remains a significant investment vehicle for Ethereum exposure. With its assets estimated to be over $13 billion, it's among the leading Ethereum-based investment products. Recent developments indicate a positive trend toward the conversion of ETHE into an ETF. The SEC's decision on Grayscale's application to list ETHE under NYSE Arca has been postponed until January 25, 2024. This delay suggests ongoing discussions and potential for future approval, making ETHE one of the largest Ethereum ETFs in the US. 

XBT Provider Ethereum Tracker One (COINETH)

Ethereum Tracker One (COINETH) from XBT Provider, with total assets of $2.58 billion, making it among the largest crypto exchange-traded products (ETPs) overall and the second-largest Ethereum-backed ETF worldwide. This product stands out in the Ethereum ETF list for offering exposure to Ethereum's spot price through a regulated exchange, aligning with the rising interest in spot Ethereum ETFs globally.

The Ethereum Tracker One aims to provide exposure to the performance of Ethereum priced in USD. It offers investors exposure to the fluctuations in the exchange rate between USD/EUR for certificates denominated in EUR. Like their Bitcoin counterparts, the Ethereum ETNs are designed to track the price of Ethereum based on an index rate comprising the average of the three most liquid exchanges, updated daily. 

XBT Provider's Ethereum Tracker One (COINETH) is a spot-based Exchange-Traded Note (ETN). This financial product is designed to track the price of Ethereum as closely as possible, denominated in either USD or EUR and is traded on a stock exchange. Investors in COINETH own shares of the ETN, which are backed by the actual holding of Ethereum, not futures contracts. Therefore, it provides exposure to Ethereum's current, or "spot," price without using derivatives like futures. 

CI Galaxy Ethereum ETF (ETHX.B) 

ETH.B is managed by CI Global Asset Management, with Galaxy Digital Capital Management LP as the subadvisor, which is known for its expertise in digital assets, cryptocurrencies, and blockchain technology. 

The CI Galaxy Ethereum ETF offers exposure to the actual market performance of the digital currency Ether (ETH). It is appropriate for investors who can absorb a loss of some or all of their investment due to the speculative nature and volatility of the Ether market. The ETF has a high-risk rating and trades in both Canadian dollars (CAD) and US dollars (USD). 

The CI Galaxy Ethereum ETF (ETHX.B) is a Canadian spot-based ETF. It provides investors with exposure to the spot price of Ethereum by holding the actual Ethereum tokens. The ETF's assets are physically backed by Ethereum, meaning that when investors buy shares of ETHX.B, they are buying a share of an ETF that holds the underlying Ethereum directly, as opposed to holding derivatives or futures contracts. This spot-based approach allows investors to gain exposure to the actual performance of Ethereum without the need to purchase or store the cryptocurrency directly.

21Shares Ethereum Staking ETP 

The 21Shares Ethereum Staking ETP (Exchange Traded Product) is designed to track the investment results of Ethereum, aiming to generate returns beyond Ethereum's price appreciation. This product is provided by 21Shares AG, a company known for specializing in cryptocurrency ETPs. This ETP aims to offer investors exposure to Ethereum with the potential for earning crypto-native yield akin to interest in the traditional financial system.

This ETP is designed to track the investment performance of Ethereum. However, it goes a step further by engaging in staking. Staking involves participating in network operations and earning rewards, analogous to earning interest.

By staking its Ethereum holdings, the ETP aims to generate additional returns for investors beyond the appreciation of Ethereum's price. These rewards come from the process of validating transactions on the Ethereum network.

The 21Shares Ethereum Staking ETP is a spot-based product. It directly holds Ethereum and additionally engages in staking activities with that Ethereum to earn rewards. Unlike a futures-based product that would be backed by contracts betting on the future price of Ethereum, this ETP gives investors exposure to the current, or "spot," price of Ethereum, plus the potential added returns from staking rewards.

Purpose Ether ETF (ETHH) 

The Purpose Ether ETF (ETHH) is the world's first physically settled Ether ETF, providing investors with an efficient way to own Ether in their investment accounts. The Purpose Ether ETF allows investors to earn yield by harvesting volatility-rich premiums in a nascent asset class. Additionally, the ETF holds 100% physically settled Ether and uses secure offline storage, also known as "cold" storage, for the majority of its holdings. The fund also utilizes an online or "hot" wallet for transitory purchases when buying and selling Ether.

The Purpose Ether ETF (ETHH) is spot-based. It is designed to expose investors to Ethereum's spot price by physically holding the actual Ethereum tokens. When investors buy shares of ETHH, they are purchasing a share of an ETF that directly owns Ethereum, not a share based on futures contracts. This structure allows investors to have an investment vehicle that closely tracks Ethereum's current price.

As you can see from the list above, most of the popular ETH ETFs are based outside the US. As of January 2024, while the SEC has approved spot Bitcoin ETFs, it is yet to approve any spot ETH ETFs in the US market. However, such an approval would make investing in crypto ETFs more attractive, encouraging more institutional investors to participate and buy these investment products. Hence, there is excitement surrounding BlackRock’s recent applications, with the SEC seeking approval for the company’s spot in the Ethereum ETF in the US markets. 

The crypto market is already abuzz with excitement after the SEC approved 11 Spot Bitcoin ETFs on January 10, 2024. As of April 2024, the SEC has postponed the decision to approve or reject BlackRock and Fidelity's spot Ether exchange-traded funds. The decision delay marks the second postponement after the initial delay in January, with the final deadline set for VanEck’s spot Ethereum ETF decision on May 23, 2024. Market analysts anticipate SEC approval or denial only after VanEck’s final May deadline for Ethereum ETFs.

However, it’s worth keeping an eye on the following ETH ETF applications that are also awaiting approval: 

VanEck Ethereum Strategy ETF (EFUT)

The VanEck Ethereum Strategy ETF (EFUT) aims for capital appreciation by investing in Ether futures contracts. It is an actively managed fund that provides investors access to Ether-linked investments through an exchange-traded vehicle without directly investing in Ether or other digital assets.

VanEck has taken a proactive step in the race for spot Ethereum ETF approval by updating its S1-A filing with the SEC, aiming to position itself ahead of the potential decision deadline on May 23, 2024. This update highlights the firm's strategic move to secure a favorable position for its proposed spot Ethereum ETF in a market that has seen growing interest from traditional investment firms following the success of spot Bitcoin ETFs. 

BlackRock iShares Ethereum Trust

BlackRock, a major asset management firm, officially filed an application for a spot Ethereum ETF with Nasdaq. This type of ETF would allow for direct investment in Ethereum and is pending regulatory approval by the SEC.BlackRock's pending Ethereum ETF application, which aims to list an ETF tracking Ether's spot price, has sparked market excitement, evidenced by a surge in Ether's price. 

BlackRock has received a significant boost in investor confidence following the approval of its spot Bitcoin ETF application by the SEC in January 2024. However, the SEC has delayed its decision on Blackrock’s spot Ethereum ETF. The introduction of such an ETF by a major financial institution could signal a broader acceptance and accessibility of cryptocurrencies for average investors​. 

Fidelity Ethereum Fund 

Fidelity Investments has actively pursued approval from the U.S. Securities and Exchange Commission (SEC) for a spot Ethereum ETF, showcasing its commitment by updating its filing to include Ethereum staking. This innovative addition aims to offer investors a new avenue for potential returns, enhancing the appeal of the ETF if approved. 

Fidelity’s decision to incorporate staking into its Ethereum ETF proposal reflects a forward-thinking approach to cryptocurrency investment products, aiming to capture the full spectrum of Ethereum's value proposition beyond mere price speculation​. Despite Fidelity’s efforts and the broader industry anticipation, the SEC has delayed its decision on both Fidelity and BlackRock’s spot Ethereum ETF applications, with no final decision made by the expected deadline. 

ARK Invest and 21Shares Futures ETFs

Cathie Wood's ARK Invest and 21Shares have applied for two futures ETF products with the U.S. Securities and Exchange Commission: 

1. ARK 21Shares Active Ethereum Futures ETF (ARKZ): This ETF will allocate at least 25% of its funds to Ether futures products, with the remainder invested in U.S. Treasuries, market instruments, and repurchase agreements.

2. ARK 21Shares Active Bitcoin Ethereum Strategy ETF (ARKY): This ETF aims to invest at least 25% of its funds in Bitcoin and Ether futures products. The remaining assets will be in cash and cash equivalents, primarily U.S. government securities.

These products will focus on cash-settled futures contracts traded on commodity exchanges like the CME. They will not maintain direct exposure to 'spot' Ether or Bitcoin. This strategy aligns with the SEC's preference for futures ETFs over spot ETFs due to regulatory and risk considerations. 

Grayscale Ethereum Trust to Spot Ether Fund

Grayscale Investments is in the process of converting its Ethereum Trust into a spot Ether fund. Grayscale is a major player in the digital asset space, and its move to a spot Ether fund is noteworthy. 

Grayscale Investments has filed with the SEC to convert its Grayscale Ethereum Trust into a spot Ether ETF following the approval of the first Ether futures ETF. The conversion application was submitted by the New York Stock Exchange Arca on October 2., 2023 

The existing trust, launched in March 2019, currently holds Ether futures contracts, but the spot ETF would invest directly in the underlying Ether. As of the latest reports, the Grayscale Ethereum Trust is valued at $5.6 billion and represents about 2.5% of the circulating supply of ETH, with 250,000 investor accounts having exposure to the trust. 

Hashdex Ethereum ETF

Hashdex has submitted a unique proposal for a spot Ethereum ETF to the SEC, planning to purchase physical Ethereum mainly from the CME. The Brazil-based asset manager intends to modify its existing Bitcoin Futures ETF to hold spot Ethereum. 

Additionally, Nasdaq has applied to list the Hashdex Nasdaq Ethereum ETF, which will integrate spot Ethereum holdings and futures contracts. Toroso Investments will manage the fund if approved.

Invesco and Galaxy Digital’s Ethereum ETF 

In collaboration with Galaxy Digital, Invesco has applied to launch a spot Ethereum Exchange-Traded Fund (ETF) in the United States market. The submission of this joint application marks Invesco and Galaxy Digital as the fifth entities to pursue an Ethereum spot ETF in the US, following similar applications from VanEck, ARK Invest, Hashdex, and Grayscale. In February 2024, the SEC postponed its decision on Invesco and Galaxy Digital’s Ethereum ETF. It now has time until July 2024 to approve or reject this ETF. 

The initial reports about the application for an Ethereum ETF were later clarified, with analyst James Seyffart highlighting that the application by Galaxy Digital and Invesco had been filed initially on September 29, with the recent updates indicating an amendment to the application. The adjustments to the application are linked to the recent introduction of ETFs for Ethereum futures in the United States.

​​Bitwise Ethereum Strategy ETF (AETH) 

Bitwise Asset Management has actively joined the race to launch a spot Ethereum ETF, demonstrating a strong commitment to providing investors with regulated exposure to Ethereum. By filing an application with the SEC, Bitwise seeks to offer a product that mirrors the price performance of Ethereum (ETH) while addressing operational expenses associated with fund management. 

The ETF, intended to be listed on the NYSE Arca with Coinbase Custody acting as a custodian, underscores the growing interest in cryptocurrency ETFs among traditional financial institutions. Bitwise's application is notable for its detailed correlation analysis, aiming to demonstrate a strong alignment between the Ethereum spot market and the CME Ethereum futures market, thereby addressing SEC concerns about market manipulation and price discovery integrity​. 

Interestingly, Bitwise has taken a strategic stance by suggesting that the SEC delay the decision on their spot Ethereum ETF until the end of the year, rather than rushing for a May launch. Matt Hougan, Bitwise's CIO, articulated that a December launch could be more beneficial for the market, allowing traditional finance sectors more time to adapt to the introduction of Bitcoin ETFs. This approach reflects a nuanced understanding of market dynamics and regulatory landscapes.

The SEC is expected to decide on several Ethereum ETFs by May 2024. The regulator's previous greenlighting of Ethereum futures ETFs hints at a potential positive outcome for spot Ether ETFs​. 

As Ethereum continues to gain traction, the allure of tapping into its potential without directly buying and storing the cryptocurrency attracts many investors. But with a growing field of contenders, selecting the right one can feel daunting. Here are key factors to consider when selecting the right ETH ETF to invest in: 

1. ETH ETFs’ Cost and Performance

• Expense Ratio (TER): Every penny counts. Prioritize ETFs with a competitive Total Expense Ratio (TER), as it impacts your investment costs and potential returns. Opt for ETFs with lower TERs, like XBT Provider Ethereum Tracker One (COINETH) at 0.45%, maximizing your long-term returns. 

• Liquidity: Liquidity is crucial for ease of trading, and a substantial Assets Under Management (AUM) often signifies investor confidence and stability. Ensure smooth sailing with ETFs boasting high trading volume, like the Grayscale Ethereum Trust (ETHE), the largest with over $13 billion in assets under management.

2. Tracking and Investment: Physical Ethereum vs. Derivatives 

The method of tracking Ethereum's price varies among ETFs. Some hold physical Ether, while others use derivatives or diversify across different assets. This distinction is crucial, especially with the growing emphasis on spot Ethereum ETFs. Choose according to your risk tolerance and your investment goals. 

ETFs like CI Galaxy Ethereum ETF (ETHX.B) holding actual Ether offer direct exposure, while others like 21Shares Ethereum Staking ETP (AETH) using derivatives may expose you to additional counterparty risk.

3. Ethereum ETP’s Background and Reputation

Trust matters. Look for established financial institutions like VanEck, whose recent Spot Ethereum ETF application rekindled hopes for US approval in this category.

The reputation and experience of the ETF provider are vital. Established fund managers or financial institutions generally offer more reliability. While not indicative of future results, reviewing past performance provides insights into how the ETF has responded to different market conditions.

4. Accessibility and Regulations

• Currency and Exchange: Ensure the ETF trades on an accessible exchange and in a convenient currency. Remember, regulations governing availability can change, so stay informed about local requirements.

• Regulatory and Domicile Considerations: Regulatory compliance and the domicile of the ETF are important for investor protection. Understanding the legal framework can offer insights into the security and operational standards of the ETF. 

5. Assess Market Volatility and Diversification

Understand the inherent risk of investing in a volatile asset like Ethereum. Consider diversifying your portfolio with other ETFs.

You can invest in an ETH ETF just like a traditional ETF;  only ensure that you find an ETF that offers exposure to Ethereum. Here are the steps you can take when investing in Ethereum ETFs: 

1. Research and Selection: Conduct thorough research on available Ethereum ETFs to identify the one that best aligns with your investment goals, risk tolerance, and investment strategy. Ensure that the ETH ETF you select is available for investing in your country of residence.

2. Choose a Brokerage Account: Open an investment account with a brokerage or investment platform that offers access to the specific Ethereum ETF you intend to invest in. Ensure that the platform operates within your country and adheres to local regulations.

3. Fund Your Account: Deposit funds into your brokerage account to provide the capital for investing in the Ethereum ETF. The funding method and time can vary depending on the platform and your location.

4. Place an Order: Use your brokerage account to place an order to buy shares of the chosen Ethereum ETF. Specify the amount you intend to invest and review the details before finalizing the purchase.

5. Monitor Your Investment: Keep track of your investment in the Ethereum ETF and stay updated with the cryptocurrency market and ETF performance, especially regarding Ethereum ETF approvals and listings.

6. Be Aware of Regulatory Developments: Keep in mind that the regulatory landscape for Ethereum ETFs can vary. For instance, the SEC's recognition of Ether as a commodity when approving Ethereum futures ETFs suggests a likely approval of spot Ethereum ETFs in the near future​. Regulations and availability of Ethereum ETFs can vary by location. It's advisable to consult with a financial advisor to ensure compliance with applicable regulatory requirements.

Note: Regulations and availability of Ethereum ETFs may vary based on your location, so it's advisable to consult with a financial advisor or investment professional and ensure compliance with any applicable regulatory requirements before proceeding with an investment in an Ethereum ETF.

As the crypto adoption matures, Ethereum ETFs are increasingly garnering attention due to their potential to bridge the gap between traditional finance and cryptocurrencies. This trend is underscored by the flurry of Ethereum ETF applications, reflecting heightened institutional interest in this sector, especially against the backdrop of recent spot Bitcoin ETF approvals by the SEC.

The U.S. Securities and Exchange Commission (SEC) has postponed its decision on several Ethereum ETFs to May 2024. This includes notable applications such as the Hashdex Nasdaq Ethereum ETF and the Grayscale Ethereum Futures ETF. While these delays might initially seem concerning, they are standard regulatory procedures and do not necessarily indicate a negative outcome​​.

Analysts are optimistic about the approval of spot Ethereum ETFs, especially following the SEC's implicit acceptance of Ether as a commodity through the approval of Ethereum futures ETFs. This acceptance lays a foundation for the possible approval of spot Ethereum ETFs, with a significant likelihood of such approvals occurring in 2024​​.

Despite recent market fluctuations, Ethereum's fundamentals remain robust. The potential approval of spot ETH exchange-traded funds is seen as a major catalyst that could propel Ethereum's growth in 2024. Ethereum's role as a leader in blockchain development and the host of the largest number of dApps positions it well for growth, particularly in emerging sectors like Web3, NFTs, and DeFi​​.

From the seasoned giants to the agile newcomers, these future offerings stand poised to redefine the accessibility of Ethereum for investors globally. Whether you're taking your first steps into crypto or are a veteran trader, Ethereum ETFs are not just financial instruments; they are your tickets to participate in the financial revolution of Web3.

1. Ethereum ETF: Everything You Need to Know

2. Top Ethereum Layer-2 Crypto Projects to Know in 2024

3. What Is the Ethereum Cancun Upgrade (Proto-Danksharding) in Q1 2024?

4. What Is a Bitcoin ETF? Everything You Need to Know

5. Bitcoin Price Prediction 2024: What Happens If Spot Bitcoin ETFs Are Approved by the SEC?

6. Everything You Need to Know About KuCoin Leveraged Tokens