As a researcher with a background in finance and experience following the cryptocurrency market, I find Fidelity’s decision to seed its Ethereum ETF with $4.7 million an intriguing development. The move comes as other major asset managers, such as BlackRock and Bitwise, have also announced their intentions to seed their own Ethereum ETFs.
A leading global asset manager with the fourth largest assets under management has announced its intention to invest $4.7 million in the forthcoming Ethereum Exchange-Traded Fund (ETF) prior to its launch, as disclosed in a recent regulatory document.
According to Fidelity’s S-1 filing for the “Fidelity Ethereum Fund” submitted last Friday, the Trust received a total of $4,749,975 in proceeds from selling the Seed Baskets.
Fidelity Buys Its First Batch Of Ethereum
I successfully acquired 1,250 Ether tokens on June 4th using the proceeds from previous investments. This purchase was made on my behalf by FMR Capital, an affiliate of renowned asset manager Fidelity. As a result, they secured themselves ownership of approximately 125,000 ETH shares with each share costing around $38.
As a crypto investor, when a fund manager introduces a new Bitcoin ETF to the market, they infuse it with their own funds to ensure ample liquidity for early buyers and showcase their belief in the success of the fund. For instance, Fidelity initiated its Bitcoin ETF with an investment of $20 million back in January. In comparison, other major competitors such as BlackRock and Bitwise contributed seeds worth $10 million and $200 million respectively.
This week, Bitwise’s registration statement indicated that they had invested $2.5 million into their Ethereum ETF, and mentioned that Pantera Capital Management could potentially purchase up to $100 million of shares. Subsequently, Fidelity and BlackRock announced that they would each invest $10 million into their respective funds, equivalent to their initial Bitcoin fund investments.
Among the applicants disclosing seed numbers for their Ethereum funds, Franklin Templeton is the only one to unveil its management fee – set at 0.19% – which is identical to their Bitcoin product’s fee. Consequently, this makes Franklin Templeton’s Ethereum fund the most affordable option among all Bitcoin and Ethereum ETFs announced thus far, with VanEck’s coming in slightly more expensive at 0.2%.
Experts believe other providers may disclose their pricing as the launch dates draw near. According to Bloomberg ETF analyst Eric Balchunas, his forecast suggests a potential release in early July.
“Many people are probably holding off making their moves until the last minute or looking towards BlackRock for guidance before making their decisions,” Balchunas tweeted on Friday.
How Well With ETH ETFs Perform?
Analysts anticipate that Ethereum’s ETF inflows may not surpass those of Bitcoin, but they are projected to significantly outshine the typical new ETF product. According to previous predictions by Balchunas, these funds could attract 20% of the flows that their Bitcoin equivalents have – which amounts to approximately $14.6 billion since January.
A more optimistic view holds that ETFs could account for 28% of Bitcoin-related products’ gains, equating to approximately $4 billion over the next five months, according to K33 Research’s recent report. Previously in March, Standard Chartered predicted Ethereum ETFs would attract around $45 billion in investments within a year.
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2024-06-22 00:20