The price of Ethereum rose sharply on Monday morning as a sense of calm spread in the market after the French election, in which right-leaning parties won by a smaller margin than expected. The ETH token soared to a high of $3,515, its highest point since June 22nd, and 8% above its lowest point last month.
SEC delays spot Ethereum ETFs
Ether’s price jumped even as the Securities and Exchange Commission (SEC) delayed its approval of spot Ethereum ETFs. On Friday, the agency returned the application documents to companies for amendment.
That means the agency will not approve these funds on July 2nd, as widely expected. Instead, the approval could take weeks or even months, dealing a blow to cryptocurrency investors.
In a recent statement, Gary Gensler noted that the agency would approve these ETFs by September this year. That will be a big move in the crypto industry since Ethereum is the second-biggest crypto.
Moreover, ETH has a long history of doing well, from less than $10 in 2014 to over $3,500 today. Ethereum has a big use case since it powers most of the crypto industry’s decentralized finance giants, including Maker, AAVE, and Uniswap, including a total value-locked of $108 billion and over $78 billion in stablecoins.
As a result, the network generates vast sums of money. Data shows that Ethereum has earned over $1.7 billion in fees this year, a figure higher than Tron and Bitcoin.
Two reasons to avoid ETH ETFs
Spot Ethereum ETFs would be well-suited for large institutional investors who are often unsure about how to handle keys and their cryptocurrency holdings. There are indications that there will be demand for these funds. For instance, despite its 2.50% fees, the Grayscale Ethereum Fund has nearly $10 billion in assets, a significant figure considering that most ETFs charge less than 0.25%.
However, investing in Ethereum ETFs may not be suitable for all investors. Here are two main reasons to reconsider.
First, these funds come with relatively high fees. In particular, most ETH ETFs come with an expense ratio ranging from 0.12% to 0.95% (depending on which type of ETF you buy). These fees can eat into your trading budget and reduce potential returns.
Secondly, these exchange-traded funds will not benefit from Ethereum’s staking rewards, which currently yield 3.1%, a better yield than most assets.
Buying and holding ETH in a secure brokerage, like Coinbase, could be more profitable than investing through an ETF for investors who are familiar with buying cryptocurrency.
