Nine exchange-traded funds (ETFs) offering exposure to ether futures launched on the same day last week.
Nine ETF S offering exposure to Ether futures launched on the same day last week five, hold only Ether futures while the other four hold a mix of Bitcoin and Ether futures joining us now to discuss is pro shares global investment strategist Simeon Hyman, welcome Simeon. Thanks for having me. Glad to see you. So, uh pro shares they, they offered uh some of these uh an ETF exchange traded products here based on Ether. Uh Reuters said that the pro shares Ether Strategy ETF saw just, uh it was something like a little under $900,000 of trading on the first day. Uh How would you say this went? Yeah, we're so we, we're showing the most volume of all the uh, of all the E three ETF S that launched and the spreads are really tight. Uh So we are certainly optimistic that that's an indication that uh folks will see that as an effi as, as a proof point of the efficaciousness of the solution. Uh What we proved with BIT O we're the uh global leader in crypto linked ETF S as you're probably familiar with, we launched Bito our Bitcoin Strategy. ETF two years ago and it's seen about $2 billion in flows. It's the largest crypto linked ETF. So we, we know that that combination of the regulated futures market and ETF in an ETF wrapper is, uh, is a very effective solution and with the trading and the tight spreads, uh we think folks will, uh will see this as an important way to get exposure to the second largest Cryptocurrency. It's the second largest Cryptocurrency. And as you pointed out, BDO, it did phenomenally well, when it was launched. Uh and, and it's still alive, it's still doing well. It's still a huge chunk of the futures market on the CME is based on, on bo buying uh all these uh futures here, but we're not seeing the same. Uh We, we're seeing just a fraction of that when it comes to the, the Ether ETF, is it a lack of interest in general to crypto right now? Given market circumstances, we're seeing the lowest volume all across the board uh that we've, that we've seen in five or 10 years, even in some cases, uh when it comes to crypto is the lack of interest relative to Bo uh in the Ether's futures due to a lack of interest in Ether or a lack of interest in general. And crypto right now, I think in the very short run, the answer is we don't know uh what we know is that Ether is about, you know, 30 or 40% the size of Bitcoin from a market cap standpoint. We also know that, you know, it offers different exposure to the Cryptocurrency universe if you will bit of Bitcoin fixed supply and uh more of a digital gold ether, not fixed supply, but access to the growth of the Ethereum ecosystem. So these two are complementary part of it may be that, you know, folks are educating themselves as to the complementary role of these two in getting crypto exposure. Uh But in the very short one, we don't know. But if you had to make a guess over time, uh a decent guess would be, you know, ultimately uh size uh pro attitude there market caps. How does this, how does this reflect on the idea that OK, if there is a spot ETF that changes everything, why aren't people who say who are saying that getting on that ether exposure with the Ether ether futures? ETF if that's the case, if they're saying they, they have similar risk uh profiles. So why aren't they using uh the futures? ETF compared to so well, the people who are saying that, that, that a spot ETF should it launch will be a huge boon to, to crypto? But why aren't these people right now investing in a future? ETF which has similar risks? Yeah. Again, in the very short run, we don't know. But what we know from the bo experience is that a futures based ETF is a really, really effective solution. I was in the wings listening to all your previous conversations and there's a lot of stuff going on in the spot in the exchange market. It's just not quite mature yet and we're not in any position to guess what the regulatory path would be. But we know that here and now today that a futures based ETF is a very effective solution. You're in CME you got a clearinghouse margins posted, it's regulated all that good stuff. Put it in an ETF, you can buy it in a brokerage, uh brokerage account, a very robust solution. And we know from performance that uh bit O has tracked uh Bitcoin very well since its inception. So I think it's the here and now it's a very solid solution and again, short term over the week or two, we we could come up with lots of theories but you know, something pointing towards that kind of pro rat in this from a market cap standpoint, we think is the opportunity, you know, nine funds launched at the same time removing that first mover advantage for any single one of the funds that launched. How are you thinking about remaining competitive? Well, number one, we're, we are the global leader in crypto linked ETF S cause we're the folks that brought bit auto market first. And you know, one thing we know how to do with pro shares is run funds like this. So we certainly think we have the expertise to do so. And the other is to make sure that uh people are aware, aware of the funds and not just of course, e but we also launched, as you noted, Beth, which is our Bitcoin and Ether market cap weighted strategy fund and Betty, which is equally weighted. So uh that's part of our suite. Uh And as I, as I noted so far, uh our volumes are at the top of the heap and our spreads are super, super tight. So uh we'll keep doing our jobs and, and we think they'll speak for itself. You said that you can't really speak about the regulatory chances here which uh nobody can. But I'm just curious, like what is the strongest argument for something like this being approved? Like why would this be in regulators interest to approve something like this? Are you talking about a spot? ETF Yeah, II I not really my expertise. I don't know what that path will be and no one knows how, how long it will be. So we're, we're kind of happy to be offering the uh future solutions in the here and now. And we also think that ultimately whenever that day comes, uh uh there's a uh a very likely odds of coexistence, you know, you think about uh things like in the futures market, there's academic evidence that price realization is actually a little bit faster. Uh Remember there is no one price for any Cryptocurrency. There are multiple exchanges and that's resolved in the futures market by using multiple exchanges to uh to triangulate that closing price. So, you know, there are advantages to uh to the future space even in whenever that world comes and, and no one really knows when it could be. Would you, uh rather, would you rather keep things as is, or do you want to see a spot? ETF, I mean, that, that would just, that would, that might an end to your, uh your market share there? Yeah, we don't really have a point of view on that, but as I said, we're just sort of happy, happy to have the lights on and happy to have the, the largest crypto linked ETF and BO and, and really pleased to bring it's ok if you want to trash a spot ETF here, you know, and, and you know, make the case for why everyone should just go futures. I'm not gonna say no, I think there's, there's kind of no need to trash. It's just no one knows when and how and, and the lights are on and, and we uh we're really proud to be running these funds uh quite effectively. God, do you think you'll see, do you think you'll see any other assets besides Bitcoin and E as, as potential futures down the road? I can't comment on, on our product development path per se, but um we're obviously always at an innovation is core to who we are at proshare. So if we see opportunities and we'll pursue, all right, Sam, and we are going to have to leave it there. Thanks so much for joining us this morning. Thanks so much those pro shares, Global Investment strategist Simeon Hyman.