Every time a new crypto product is about to enter the market, the crypto community is abuzz with anticipation, hoping that the newcomer will bring a positive change to the crypto space and drive prices up. However, these hopes and wishes don’t always come true, as was the case with the recent spot Ethereum ETF introduction.

On July 23, the moment that so many crypto enthusiasts have been waiting for with bated breath finally arrived – and passed without any bells and whistles. The U.S. Securities and Exchange Commission approved the launch of nine exchange-traded funds that directly hold Ethereum, marking a new premiere in the crypto landscape. There’s been a lot of excitement surrounding this event, which happened in a rather precipitous and unexpected manner. Almost every ETH prediction of the past few months included the arrival of spot Ether ETF as a decisive factor for the asset’s future.

However, now that Ether ETFs are finally trading, the market is awfully quiet. The enthusiasm that was almost palpable in the lead-up to this historic milestone seems to have dissipated, and the Ethereum price isn’t showing any signs of improvement. Have analysts been too quick to forecast a price spike, or is there a different explanation for this confusing scenario?

History in the Making

To make sense of Ethereum’s current price action or lack thereof and the correlation with the debut of spot Ether ETFs, we need to analyze the event as it happened. After spot Bitcoin ETFs received the green light from the US regulator in January, everyone’s attention naturally turned to Ethereum as the next asset in line to be considered for dedicated spot exchange-traded funds. Asset managers submitted their applications with the SEC, and the crypto community braced itself for a lengthy back and forth between the agency and applicants, given the decade-long battle that companies had to go through to finally get the seal of approval for their spot BTC ETFs.

But things took a very different and quite surprising turn in Ethereum’s case. Instead of the expected extended clash, the entire audience was stunned to witness a sudden change in SEC’s stance. In May, the regulator passed a rule change proposed by several stock exchanges that allowed the listing of spot Ethereum ETFs, notifying issuers they had to revise their 19b-4 forms. This represented the first and most important step of the process. All that was left was for asset managers to send in their S-1 registration statements – a procedure that was considered a mere formality.

A few weeks later, on June 23, a total of nine spot Ethereum ETFs became available and ready to trade. This included ETF products from Grayscale, BlackRock, Invesco Galaxy, 21Shares, VanEck, Bitwise, 21Shares, and Franklin Templeton. All funds were off to a strong start, and especially BlackRock’s iShares Ethereum Trust (ETHA), registering considerable inflows from the first day, with a total of approximately $107.8 million and more than $1 billion in trading volume.

However, their inauguration was lackluster in terms of price gains for Ethereum. The altcoin leader didn’t spike as many were anticipating. On the contrary, the asset’s value took a tumble, sliding 8,2% in the first week after ETH ETFs started trading. As a result, traders and investors started to wonder if the launch of Ether ETFs was indeed going to trigger a much-awaited bull run or if it was all just a lot of noise for nothing.

Learning from Bitcoin’s Example

Although investors’ disappointment seeing that Ethereum isn’t moving in the desired direction is understandable, analysts call for patience and point out that these sorts of things take time. In other words, the impact of Ether ETFs on the altcoin’s price is not going to become noticeable right away. That’s why Ethereum seems to be lagging behind but could recover in the long run.

Experts refer back to Bitcoin’s situation to substantiate their bullish argument. If we look at what happened in January after the launch of spot BTC ETFs, we can see a similar pattern. Just like with Ethereum, crypto supporters were ecstatic with the advent of spot Bitcoin ETFs and thought that BTC pieces would skyrocket once these products went live. Bitcoin ETFs recorded impressive inflows during their first days, much bigger than that of Ethereum. Still, contrary to optimists’ hopes, Bitcoin’s price didn’t surge but slumped by 18%. Then, once the waters settled down a bit, Bitcoin went on a rally that resulted in 100% gains.

At a more in-depth analysis, we can see that Bitcoin was trading at $46,000 when BTC ETFs went live and then dropped to $39,000 over the next two weeks. The crypto rallied in the following months, hitting a new record high of $73,750. It’s not unlikely to see Ethereum mimic the crypto leader and get on a price appreciation trend in the months to come.

However, experts also draw attention to a recent development that might disturb the normal course of events. The defunct Mt. Gox, once the biggest Bitcoin exchange in the world that filed for bankruptcy in 2014 after being the victim of a hack, started to make repayments to affected customers in July. Many worry that these reimbursements will trigger a sell-off, which might impact the entire crypto market, including Ethereum, pushing prices down.

On top of that, we also have to take into account the effects that the U.S. Presidential elections had on Bitcoin and the altcoins. It was initially believed that the electoral race wouldn’t have a significant impact on cryptocurrencies, but Donald Trump’s victory sparked a massive rally, causing almost all digital currencies to experience substantial gains. This end-of-the-year bull run, which pushed Bitcoin to a new all-time high, and the optimism that currently dominates the market would trickle down towards other assets, encouraging investors to put more money into altcoins, and Ethereum might stand to gain the most from this.

Wrapping up

The fact that Ethereum hasn’t been at its best game despite the introduction of spot Ether ETFs has become a cause of concern for many investors. Nevertheless, experts maintain their optimism, emphasizing that inflows from ETH ETFs coupled with favorable macroeconomic factors could pave the path for a strong end of the year for Ethereum.