The Best Ethereum ETFs of 2024-2026: A Comprehensive Investment Guide

Ethereum is entering a new phase as Ethereum exchange-traded funds (ETFs) become a key investment tool from 2024 to 2026. Following the SEC’s approval of Bitcoin spot ETFs in January 2024, the market has entered a new era where cryptocurrencies are widely recognized as an asset class, increasing pressure to approve the best Ethereum ETFs.

Market Context: Ethereum ETFs Amid a Financial Turning Point

The approval of Bitcoin spot ETFs has opened a new door for the cryptocurrency market. Not only Bitcoin, but the global investment community is also awaiting similar decisions from the SEC regarding Ethereum — the second-largest cryptocurrency by market cap, currently valued at $236.50 billion USD.

This excitement is not without reason. Ethereum is not just a digital asset but also the foundation of a vast ecosystem containing thousands of decentralized applications (dApps). With ETH prices recently rebounding (currently trading at $1.96K, up 1.15% in 24 hours), investors are seeking ways to gain exposure without directly purchasing and storing the asset.

A significant development is BlackRock’s recent Ethereum ETF application — the world’s largest asset manager. This move is not just a recognition but also a strong signal of a shift in how global financial institutions view Ethereum. It could serve as a catalyst for Ethereum to become a mainstream asset among global investors.

Detailed Comparison: Top Notable Ethereum ETFs Today

Although the SEC has yet to approve a spot Ethereum ETF in the US, several notable Ethereum ETFs are operating in other markets:

Grayscale Ethereum Trust (ETHE) is one of the primary vehicles for gaining exposure to Ethereum. Backed by Grayscale Investments (a subsidiary of Digital Currency Group), it manages over $13.09 billion USD — the highest among current Ethereum products. ETHE is structured as a trust holding actual Ethereum, allowing investors to access the spot price without direct purchase. However, its annual expense ratio (TER) is 2.00%, higher than competitors. Grayscale has expressed intentions to convert ETHE into a spot ETF if approved, a step expected to be completed soon.

XBT Provider Ethereum Tracker One (COINETH) is an ETN (Exchange-Traded Note) traded in Europe. With assets under management of $2.58 billion USD, COINETH features a competitive fee rate of just 0.45%, the lowest among the listed products. It tracks the spot price of Ethereum based on the average of the three most liquid exchanges, updated daily.

CI Galaxy Ethereum ETF (ETHX.B) managed by CI Global Asset Management with Galaxy Digital Capital Management LP as advisor, holds actual Ethereum, providing direct access to the digital asset. With $1.53 billion USD in assets and a fee of 0.40%, ETHX.B is traded in both Canadian and US dollars, suitable for high-risk tolerant investors.

21Shares Ethereum Staking ETP (AETH) offers a unique approach by combining Ethereum holding with staking participation. This product allows investors to earn rewards from validating transactions on the Ethereum network, generating additional cash flow beyond asset appreciation. With a fee of 0.80% and $1.30 billion USD in assets, AETH offers higher yield potential but also carries corresponding risks.

Purpose Ether ETF (ETHH) is the world’s first physically-backed Ether ETF. ETHH holds 100% actual Ethereum, stored securely with a combination of cold storage for most assets and hot wallets for operational transactions. With $1.26 billion USD in assets and a 0.40% fee, ETHH provides a simple and secure way to invest in Ethereum.

Upcoming Ethereum ETF Products: New Investment Opportunities

The cryptocurrency market is heating up after the SEC approved 11 Bitcoin spot ETFs in January 2024. This success has spurred a wave of candidates preparing for Ethereum ETF approval.

BlackRock’s Spot Ethereum ETF represents the firm’s commitment as the world’s largest asset manager. The application aims to list a spot Ether ETF on Nasdaq, enabling direct and easy investment in Ethereum. BlackRock’s backing is seen as a strong endorsement of Ethereum’s future potential.

ARK 21Shares Ethereum Futures ETF (ARKZ) developed by ARK Invest of Cathie Wood will allocate at least 25% into Ethereum futures, with the remainder in US Treasuries and market instruments. This approach aligns with SEC’s preference for futures ETFs over spot ETFs due to regulatory considerations.

Grayscale Ethereum Trust to Spot Ether ETF marks a significant development. Grayscale is in the process of converting its Ethereum Trust into a spot Ether ETF, shifting from futures-based structure to actual Ethereum holdings.

Hashdex Ethereum ETF — a Brazil-based asset manager — has filed a unique proposal for an Ethereum spot ETF. Hashdex plans to modify its existing Bitcoin Futures fund to hold Ethereum spot, while Nasdaq has submitted an application to list Hashdex Nasdaq Ethereum ETF, which will include both spot and futures Ethereum.

Invesco and Galaxy Digital Ethereum ETF — a collaboration between Invesco and Galaxy Digital — is the fifth entity pursuing SEC approval for a spot Ethereum ETF in the US, after other applicants like VanEck, ARK Invest, Hashdex, and Grayscale.

Choosing the Best Ethereum ETF for You

With increasing options, selecting the right Ethereum ETF can be complex. Consider these key factors:

Cost and Performance are primary. The annual expense ratio (TER) directly impacts your returns. For example, COINETH with a 0.45% TER is more cost-effective than Grayscale’s 2.00%. Liquidity also matters — funds with larger assets under management, like Grayscale (over $13 billion USD), tend to be more stable with higher trading volumes.

Tracking Method varies among funds. Some hold actual Ethereum (spot), while others use futures or a hybrid strategy. This difference is crucial because spot ETFs provide direct exposure to current prices, whereas futures ETFs may face basis risk.

Reputation and Experience of Providers are vital. Established firms like BlackRock, Grayscale, and Invesco offer higher reliability. Before investing, review their track records, past initiatives, and how they respond to market volatility.

Availability and Regulations differ by location. Some ETFs are only available in specific markets or traded in certain currencies. Ensure the ETF you choose is accessible on your preferred exchange and denominated in a currency convenient for you.

Volatility and Diversification Strategies are essential. Ethereum is highly volatile, offering potential for significant gains but also risks. Consider diversifying your portfolio with Ethereum ETFs alongside other assets to mitigate risk.

A-Z Guide to Investing in Ethereum ETFs

Step 1: Research and Selection — Conduct thorough research on available Ethereum ETFs. Compare expense ratios, assets under management, tracking methods, and provider reputation. Identify the ETF that best aligns with your investment goals, risk tolerance, and strategy. Confirm that the ETF is available for trading in your country.

Step 2: Choose a Brokerage Account — Open an account with a regulated brokerage or investment platform that provides access to your selected Ethereum ETF. Ensure the platform is properly regulated and offers competitive trading fees.

Step 3: Deposit Funds — Transfer funds into your brokerage account. Make sure you have enough capital not only to purchase the ETF shares but also to cover any associated fees.

Step 4: Place an Order — Use your brokerage platform to find your chosen Ethereum ETF and place a buy order. Specify the amount you want to invest and review all details before confirming.

Step 5: Monitor Your Investment — After purchasing, regularly review your investment’s performance. Keep updated on fund performance, Ethereum price movements, and relevant industry news. This will help you make informed decisions about increasing, holding, or reducing your position.

Step 6: Stay Informed on Regulations — Regulations around Ethereum ETFs can change. For example, recent SEC approvals of Ethereum futures ETFs lay the groundwork for potential spot ETF approvals. Stay updated on legal developments to ensure compliance.

Future Outlook for Ethereum ETFs

Despite recent market volatility, Ethereum remains a relatively strong asset. Its role as a leader in blockchain development, combined with its position as the platform for thousands of dApps, positions it well for continued growth.

The rise of Web3, NFTs, DeFi, and other Ethereum-based technologies has attracted attention from both established companies and startups. These entities are developing products and services related to Ethereum, which could change how global investors access and participate in this digital asset.

The potential approval of the best Ethereum ETFs is seen as a catalyst that could propel Ethereum’s development in the coming years. Whether you are a new investor or experienced, Ethereum ETFs are not just financial tools but also a bridge to participate in the Web3 financial revolution.

Important Note: Regulations and availability of Ethereum ETFs may vary by region. Always consult with a financial advisor or investment professional before making any investment decisions to ensure compliance with current local regulations.