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Volatility Shares has launched its 2X Ether ETF, providing investors with leveraged exposure to Ethereum’s price movements. This new product follows the recent SEC approval of eight spot Ethereum ETFs, enhancing investment opportunities in the crypto market.
Volatility Shares Launches 2X Ether ETF, Offering Leveraged Exposure to Ethereum’s Daily Performance
Investment manager Volatility Shares launched the 2x Ether ETF (ETHU) on June 4 following the publication of its Prospectus. The new Ethereum product, as stated in the Prospectus, "seeks investment results, before fees and expenses, that correspond to two times (2x) the daily performance of Ether."
According to CoinGape, the first product to be launched since the United States Securities and Exchange Commission (SEC) approved eight spot Ethereum ETF products last month is Volatility Shares ETHU. The Volatility Shares ETHU will provide investors with a novel method of acquiring exposure to the underlying assets as a bridge ETH product.
The firm stated in the Prospectus that the Fund will not invest directly in Ethereum.
"The Fund does not invest directly in ether. Instead, the Fund seeks to benefit from increases in the price of Ether Futures Contracts in its pursuit of seeking to produce 2x the performance of ether."
Furthermore, the Volatility Shares 2x Ether ETF can potentially invest in reverse purchase agreement transactions. It also acknowledged intentions to invest in the shares of other companies that invest in a comparable product. The Fund will allocate 80% of its capital to the product as a precautionary measure by its investment strategy.
Volatility Shares is not unfamiliar with the concept of floating crypto-related products for the US market. As previously reported by Coingape, in the third quarter of 2023, the company introduced an Ethereum Futures ETF. This is one of the numerous Ethereum-related products that was considered a significant catalyst for the approval of the spot Ethereum ETF.
Spot Ethereum ETFs May Challenge Existing Ether-Linked Products, Impacting Market Share and Fees
The sanction of spot Ethereum ETF poses a substantial threat to the preceding Ether-linked ETF products. This trend was observed in the case of ProShares Futures ETF, which experienced a significant decline in inflows following the introduction of spot Bitcoin ETF products in January.
The amount of market share that spot Ethereum ETF products will occupy when S-1 approvals are granted by the US SEC is still uncertain. However, products such as Volatility Shares may need to compete, particularly given that the organization has established its sponsor fee at 0.94%. Prospective spot Ethereum ETF issuers, such as Franklin Templeton, have more competitive costs, with a rate of 0.19%.
These products are expected to influence Ethereum's price in the long term positively. The coin is trading at $3,810.92, representing a 0.87% increase in the past 24 hours.
Photo: Microsoft Bing
