Ethereum price has risen as investors focus on potential SEC approval of spot Ethereum ETFs, following recent filings by VanEck, Invesco, and others.
ETH price increased to $3,112, 10.5% above last Friday’s level. Analysts believe ETFs could trade soon as companies finalize documents with the SEC.
VanEck filed its amended documents on Monday, followed by Invesco on Tuesday. Bitwise and 21Shares have also submitted filings.
Experts anticipate these funds will start trading shortly, resembling the trajectory of spot Bitcoin ETFs which saw over $14 billion in inflows after approval.
2 reasons to avoid spot Ethereum ETFs
Ethereum funds offer traditional investors a simplified way to track Ethereum’s price without handling crypto complexities like wallet keys. However, investing directly in Ethereum may be preferable.
Firstly, buying and holding Ethereum on exchanges like Binance, Coinbase, and OKX is straightforward. Direct investors primarily incur fees upon selling.
In contrast, Ethereum funds will likely have an expense ratio of around 0.25%. For instance, Invesco Galaxy’s fund has a unified sponsor fee of 0.25%, costing $250 annually on a $100,000 investment. Over ten years, this sums up to $2,500, assuming Ether’s price remains stable.
This fee differential explains why Bitcoin performs better than spot Bitcoin ETFs. Over the past six months, Bitcoin gained 24.31%, while ETFs rose about 20.7%. The compounding effect of this spread will grow over time.
Secondly, Ethereum funds lack staking features, which provide steady income to investors. According to StakingRewards, over $100 billion in Ether is staked, yielding about 3.29%. A $100,000 investment returns nearly $3,300 annually.
Thus, given the synchronization in movement between Ether and spot ETH ETFs, staking Ether appears advantageous.
