Another Corporate Joined the Ethereum Race: What Will Happen?

Fidelity Investments has filed for a spot Ethereum ETF, adding fuel to growing competition in the asset management industry, in a move that mirrors its previous application for a Bitcoin exchange-traded fund (ETF). In the application submitted to the Securities and Exchange Commission (SEC) on November 17, shares of the Fidelity Ethereum Fund are planned to be listed and traded on the Cboe BZX Exchange. Here are the details…

New ETF application for Ethereum

The proposed Ethereum ETF closely resembles Fidelity’s previous Bitcoin ETF application and is in line with the trend set by its main rival, BlackRock. BlackRock filed an S-1 for its spot Ethereum ETF on November 15, following its application for its spot Bitcoin ETF in June. With total assets of $4.2 trillion, Fidelity is the third largest asset manager in the world, after industry giant BlackRock, which manages a huge asset of $9 trillion. The timing of these competing filings is such that the SEC is expected to make a decision on Bitcoin ETFs by January 10, 2024. This points to a race for regulatory approval.

The decision on BlackRock’s application could set a precedent for other pending ETFs, including Fidelity’s. Fidelity’s filing highlights the need for a regulated way for US investors to gain exposure to Ethereum, underscoring the lack of low-risk options in the current market. The company claims that a lack of such products is forcing investors to explore riskier alternatives, raising concerns about potential losses and a lack of protection for US investors in the crypto asset space.

Paves the way for corporate participation

Noting a recent Grayscale court decision, Fidelity underscores the SEC’s inconsistency in approving spot crypto ETFs over futures-based products. The filing argues that approval of a spot Ethereum ETF would be an important step to protect US investors in the crypto space. Pending SEC approval, Fidelity’s filing positions the company as the seventh firm to seek approval for an Ether ETF. BlackRock joins other notable players such as VanEck, 21Shares & ARK, Hashdex, Grayscale and Invesco & Galaxy. The outcome of these applications could pave the way for increased institutional participation in the Ethereum market.

What does technical analysis show?

Meanwhile, market analysts are observing that the Leverage Estimated Ratio (ELR) for Ethereum on derivatives exchange Deribit has increased. Analysts suggest that rising ELR, which indicates increased leverage among traders, could be a harbinger of upcoming price fluctuations. This trend on Deribit, known as the epicenter of highly leveraged ETH trading, is consistent with other signs of volatility, including widening gaps in the Bollinger Bands and an upward trend in the Average True Range (ATR). It points to increased market volatility for Ethereum in the coming weeks.