Ecoin Supply

• ETFs are investment instruments that permit individuals to purchase shares that mirror the underlying asset’s price.
• After assuming the approval of their application regarding Bitcoin ETFs, Grayscale has submitted an application for their Spot Ethereum ETF.

What Are ETFs?

ETF was initially introduced for Bitcoin in order to keep track of and record the price fluctuation, if any. Even though the popularity of Exchange-Traded funds (ETT) has always been widespread in the stock market, as cryptocurrencies have taken over the market like a storm, there is a need to introduce and implement the concept of ETF in these decentralized transactions.  

Bitcoin is popular for coming up with multiple projects trying to connect the ends of the traditional exchange market with the digital stock market and its ever-growing currencies. Among these projects and their products, the Bitcoin ETF has generated a huge amount of interest, actively attracting attention. Closely related to the traditional exchanges in the stock market, ETFs for the Bitcoin cryptocurrency function on the same basis. 

When an ETF issuer purchases a certain amount of the coin it represents, the ETF then issues equal units of ownership of the fund.  Investors taking interest in a coin can simply buy shares of its ETF through brokerage accounts. If the value or price of the coin increases or decreases, the value of its ETF will also change the same way. 

Hence, the value of an EFT is directly proportional to the value of the coin. The sentiments of the market skyrocketed when BlackRock applied to buy an EFT of 

Bitcoin. According to the talks in the market, a list of high-priced companies have applied for positions in the ETF, causing the prices of the crypto coins to take a flight. These movements have increased the number of participants in the market, generally increasing activity.

How Is the Ethereum ETF Unique?

Unlike these ETFs based on traditional ideologies, the Spot Ethereum ETF focuses on Ethereum Futures. The filing by the company came out defining that the fund would exclusively trade in futures without the involvement of Ether Transactions reported through the Wall Street Journal. Because Grayscale assumes that their application for the ETF of Bitcoin will be approved, they have also submitted their finalized appeal for the approval of the ETF of Ethereum. 

Dating back to 2021, the SEC sanctioned the Bitcoin ETF, which gave investors the liberty to theorize the future prices of digital assets. Such investment products showcase the prices according to the cryptocurrency prices for the future without directly storing them. Investment companies are keen to get their hands on these spots on ETFs, through which they can gain confidence in their investments and simply know better before taking action, decreasing the risk of uncertainty about their profitable return. The crypto ETFs will offer investors a safer way to gain exposure to assets.