Volatility Shares 2X Ether ETF Goes Live, Hope for Ethereum Price
Highlights
- Volatility Shares has launched a new Ethereum ETF product
- Dubbed the 2x Ether ETF, the product comes with a 0.94% fee
- This product is considered a bridge offering pending S-1 approvals for spot Ethereum ETF
Investment manager Volatility Shares has launched its 2x Ether ETF (ETHU) following the release of its Prospectus on Tuesday. The product, per the unveiled Prospectus, the new Ethereum product “seeks investment results, before fees and expenses, that correspond to two times (2x) the daily performance of Ether.”
Precursor to Spot Ethereum ETF
Volatility Shares ETHU is the first product to launch since the United States Securities and Exchange Commission (SEC) approved 8 spot Ethereum ETF products last month. As a bridge ETH product, the Volatility Shares ETHU will form a new way for investors to gain exposure to the underlying assets.
In the Prospectus, the firm said the fund will not invest directly in Ethereum.
“The Fund does not invest directly in ether. Instead, the Fund seeks to benefit from increases in the price of Ether Futures Contracts in its pursuit of seeking to produce 2x the performance of ether.”
Additionally, the Volatility Shares 2x Ether ETF may also invest in reverse purchase agreement transactions. It also noted plans to inject funds in the shares of other companies that invests in a similar product. As a safe measure per its investment strategy, the fund will invest a total of 80% of its capital into the product.
Volatility Shares is not new to floating crypto related products for the US market. As reported earlier by Coingape, the firm floated an Ethereum Futures ETF in the third quarter of 2023. This is among the numerous Ethereum related products that was considered a major liftoff for spot Ethereum ETF approval.
Will Futures ETF Faze Off?
With the approval of spot Ethereum ETF, there is a significant threat to preceding Ether-linked ETF products. This trend was seen in the case of ProShares Futures ETF which lost significant inflow when spot Bitcoin ETF products launched earlier in January.
It remains unknown how much market share spot Ethereum ETF products will take when S-1 approvals are granted by the US SEC. Nonetheless, products like Volatility Shares might need to compete especially as the firm pegged its sponsor fee at 0.94%. It is worth noting that prospective spot Ethereum ETF issuers have more competitive fees like Franklin Templeton‘s 0.19%.
These products are poised to impact the price of Ethereum positively in the long term. At the moment, the coin is changing hands for $3,810.92, up by 0.87% in 24 hours.
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