Ethereum Spot ETF Approval Looms: 2 Reasons to Avoid It

The price of ethereum has been slowly rising over the past two days as investors focus on the approval of ethereum spot ETFs by the Securities and Exchange Commission (SEC).

The price of eth rose to $3,112 on Tuesday, 10.5% above the level it was trading at last Friday. There are hopes that the SEC will approve ETFs soon, as companies continue to file their final documents with the agency.

VanEck filed its amended statement on Monday, while Invesco did so on Tuesday morning. Bitwise and 21Shares have also filed their statements. Analysts believe these funds could begin trading as early as this week.

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These funds come just months after the SEC approved bitcoin spot ETFs, which have seen inflows of more than $14 billion.

2 Reasons to Avoid ethereum Spot ETFs

ethereum funds will offer non-traditional cryptocurrency investors a good way to track the price of ethereum without the need to deal with some of the complexities of cryptocurrencies, such as wallet keys. As such, the funds will be ideal for large institutional investors who find dealing with real currencies too complex.

However, there are two main reasons why investors should consider investing in ethereum instead of ETFs.

First of all, buying and holding ETFs in a hot or cold wallet is actually a relatively simple process. It can be easily done using one of the popular exchanges such as Binance, Coinbase, OKX, crypto.com, among many others.

After purchasing Ether, the only fee customers pay is when they sell their coins to exit the investment.

In contrast, ethereum funds will likely have an expense ratio of around 0.25%. In its filing, Invesco Galaxy revealed that its fund will have a unified sponsorship fee of 0.25%. This means that an investment of $100,000 will incur an annual fee of around $250. Over ten years, if Ether remains stable, an investor would pay $2,500 in fees.

The difference in fees explains why bitcoin has outperformed spot bitcoin ETFs. Over the past six months, bitcoin is up 24.31%, while the other ETFs are up around 20.7%. This differential will add up over time.

bitcoin ETFs, IBIT, FBTC and ARKB

Secondly, ethereum funds will not have staking functions, providing stable income to investors. Data collected by ethereum-2-0″ target=”_blank” rel=””>Rewards for participation shows that the total staked Ether amounts to over $100 billion, giving it a staking rate of 27.16%. It has a yield of approximately 3.29% and a $100,000 investment will generate a return of almost $3,300 per year.

Therefore, since Ether ETFs and spot eth will move in sync, it seems like a better idea to simply stake Ether.