The Ethereum ETF is Coming
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In my ten years of investing in crypto, we have one of the most interesting opportunities I’ve seen: this is a unique moment in history for buying and holding Ethereum (ETH).
The reason is that Ethereum ETFs have been approved, but are not yet available to the public.
This week, SEC Chair Gary Gensler acknowledged in a formal Senate hearing that Ethereum ETFs have been approved, and are just waiting for the final paperwork, meaning they should be available sometime this summer.
This is like a hotly-anticipated IPO, where excitement is building because everybody knows it’s coming. But here’s the difference: any of us can easily buy and sell Ethereum, right now, before ETH ETFs are open to the masses.
This is 100% legal and ethical: it’s another one of those unusual investment opportunities that you’ll only find in crypto.
Today I’ll unpack this opportunity and show you how to take advantage of it (TLDR: the strategy is to buy and hold ETH now).
The Recent History of Bitcoin ETFs
“History doesn’t repeat itself, but it often rhymes.” — Mark Twain
If you had invested in bitcoin at the beginning of this year — in January! — you would have already increased your investment by 50%. Your wealth would have grown fifty percent, in five months.
These eye-popping returns have been driven by the insatiable demand for spot bitcoin ETFs, which were approved in January 2024 and have since attracted over $15 billion in investor dollars.
To give some context, that’s bigger than Rivian’s IPO ($12 billion), Uber’s IPO ($8 billion), and Reddit’s IPO ($750 million).
The bitcoin ETF, as I explained in The Parable of the Bitcorn, gives ordinary investors access to buy BTC. Instead of using confusing software wallets or meeting strangers in a coffee shop, you can now just buy the ETF in your ETRADE or Robinhood account — and the ETF holds the bitcoin for you.
After the bitcoin ETF approval, all that pent-up demand for bitcoin caused the price to surge this year. I repeat: fifty percent growth in five months.
Of course, we don’t know if Ethereum will see the same price pop after the Ethereum ETFs go live.
But we do know that the bitcoin ETF opened the asset to millions of new investors. The Ethereum ETF will do the same.
The History of Gold ETFs
“History doesn’t repeat itself, but it often rhymes.” — Mark Twain
Prior to 2004, investing in gold was a hassle. You had to buy gold bars or coins. You had to store them safely. You had to buy insurance. For many investors that wanted to buy gold, all the friction and worry was not worth it.
The first gold ETF was launched in November 2004, allowing U.S. investors to “own” gold without having to physically hold it. Like the bitcoin ETF, this allowed millions of investors to buy gold as easily as buying a stock — and the ETF bought the gold for you.
This caused a surge of demand for gold: within the first three days of trading, the ETF saw an inflow of $1 billion, and a few months later the price of gold had soared 20%. Twenty percent gain on a precious metal that had been around since — well, since the Earth was formed.
Savvy investors bought up physical gold before the ETF, which of course was perfectly legal. Then they waited for the masses to pour in, driving the price up.
The power of these ETFs is they make difficult investments easy. It was a hassle to hoard gold coins, unless you were a troll. It was a hassle to buy bitcoin, unless you were a nerd. And today it is a hassle to buy Ethereum, unless you are Vitalik Buterin.
All that is about to change: the SEC has approved the Ethereum ETF. We’re just waiting on the final paperwork. Which presents a magnificent buying opportunity.
Why We Love Ethereum
We have written extensively about what makes Ethereum a great investment, so here’s the quick summary for those who are new to crypto:
· Ethereum is the second-largest crypto behind bitcoin. This gives it tremendous market power, resiliency, and trust.
· Ethereum is the #1 smart contract platform in the world. I think of it like an operating system that runs crypto apps: like the Windows or MacOS of crypto.
· Ethereum has a huge community. More investors -> more developers -> more apps -> more users, and the flywheel keeps turning. This will likely accelerate post-ETF.
· Ethereum has a huge competitive moat. Because of its leading position, it is unlikely to be toppled from its top spot anytime soon (though many L1 crypto competitors are trying).
· Ethereum has a track record of innovation. Ethereum keeps pulling off major upgrades (the massive move to Proof of Stake in 2022 was a huge technological feat, as but one example).
· Ethereum is energy efficient. Since its move to PoS, its energy use dropped by an astonishing 99%. Today Ethereum consumes less than 0.01% of the energy of bitcoin.
· Ethereum is fully decentralized. Unlike most other crypto investments, no one person controls the network. That is a massive advantage in determining its future legality.
· Ethereum has an unofficial leader. At the same time, co-founder Vitalik Buterin is one of the most thoughtful and hard-working leaders in crypto, providing wise guidance and inspiration.
· Ethereum has a vision and a plan. Unlike bitcoin, Ethereum knows what it wants to be when it grows up. (See the roadmap here.)
· Ethereum has been approved by regulators. The SEC has approved an ETF, a huge stamp of approval that should put all worries to bed: ETH is now really and truly 100% legal.
When you’ve got a hot tech stock that’s about to IPO, ordinary investors like us can almost never buy the stock before the public offering. That’s reserved for the company founders and big VC funds.
I’d argue that we are in a unique situation, where ordinary investors can buy into Ethereum, before it becomes “available” to the general public. It’s a situation very much like the bitcoin and gold ETFs.
We don’t know if history will repeat itself. But, as you may have heard, history often rhymes.
Timing the Investment
Longtime readers know that we’re not big on timing investments.
Our approach remains the same: buy and hold quality crypto assets, making monthly investments regardless of price, and hold for five or more years. (Read more on our approach here.)
But let’s just say if you’re going to set up such an investment plan, now might be a really good time to do it.
And you really, really might want to include Ethereum. Because the Ethereum ETF is coming, and ETH is coming to the masses.
You can be there first.
Disclaimers: I am not a financial advisor, just a 10+ year crypto investor who’s written two books and several hundred columns on crypto assets. I have been a long-term ETH investor for 8 years, so my opinion may be biased. All investing involves some risk; see our investing approach for how we manage risk through diversification. Never invest more than you’re willing to lose, and see losses as learning.
