How to Trade ETH ETF: What Are Ethereum ETFs?

ETFs have undeniably revolutionised the landscape of cryptocurrency investments, representing a crypto milestone in the industry.

After years of striving for approval, spot Ethereum ETFs finally received the green light from the US Securities and Exchange Commission (SEC) on May 23, 2024. This follows the earlier approval of spot Bitcoin ETFs in January 2024. This regulatory shift marks a significant leap forward for crypto enthusiasts and investors alike.

ETFs bring a host of advantages and drawbacks, and we’ll cover the main ones in this article.

*For illustrative figures

TL;DR

• Ethereum ETFs are investment products that derive their value from Ether prices.
• There are spot Ethereum ETFs and futures Ethereum ETFs.
• Ethereum ETFs are traded on stock exchanges (similar to stocks).
• Some of the critical advantages of Ethereum ETFs are that they increase liquidity and credibility and provide access to the cryptocurrency market without owning cryptocurrencies as underlying assets.
• Despite the numerous advantages of Ethereum ETFs, they are subject to volatility, and some consider them inaccurate.
• Ethereum ETFs can be traded on stock exchanges or through ETF CFDs with a provider like Plus500.

ETH ETF Explained: What Is an Ethereum ETF?

First, to understand what an Ethereum ETF is, it's crucial to comprehend what Ethereum is and what ETFs are.

What Is Ethereum?

Ethereum refers to the blockchain technology that runs smart contracts, allowing the platform users to conduct decentralised transitions without the need for an intermediary. The platform has a native cryptocurrency called “Ethereum (ETH)”, which is considered the world’s second-largest crypto after Bitcoin (BTCUSD).

You can read more about Ethereum in our article titled “What Is Ethereum”.

What Are ETFs?

Exchange Traded Funds, otherwise abbreviated as ETFs, are investment vehicles traded on stock exchanges and allow access to multiple markets. ETFs allow more regulated and accessible access to a plethora of financial markets, including commodities, indices, stocks, and cryptocurrencies, and you can read more about them in depth in our article titled “Understanding ETFs: What Is an ETF?”.

How Does an Ethereum ETF Work?

An Ethereum ETF is an investment fund that tracks Ethereum prices. It allows its traders to gain exposure to ETH price swings without having to own the cryptocurrency as an underlying asset. This ETF is traded on stock exchanges like the New York Stock Exchange (NYSE).

What Are the Different Types of Ethereum ETFs?

Spot Ethereum ETFs

This type of ETF directly reflects the value of Ethereum and is concurrent with its value. Thus, if Ethereum’s prices drop, this ETF will drop with them, and vice versa.

Futures Ethereum ETFs

Unlike the spot Ethereum ETF, this type does not directly hold Ethereum. Instead, it reflects the value of futures contracts that are exposed to Ethereum prices. Futures are contracts between two parties to buy or sell Ethereum at a predetermined price in the future.

Why Is ETH ETF important?

This, in turn, creates more trading opportunities and access to the cryptocurrency market, which may have once been ignored or frowned upon by many. This means that crypto ETFs, in general, and ETH ETFs, in particular, can offer a bridge between traditional finance and this growing market. Additionally, since Ethereum ETFs, like stocks, are traded on stock exchanges, they create more regulated and transparent access to this market.

The Pros and Cons of Ethereum ETFs

What Are the Advantages of Ethereum ETFs?

The cryptocurrency market is arguably one of the most volatile markets out there. However, Ethereum ETFs can offer more straightforward exposure to traders and investors seeking access to these dynamic markets. Additionally, the Ethereum ETFs can be a way to gain regulated access for those attracted to cryptocurrencies but scared to approach them. Finally, they can offer higher liquidity and stability.

What Are the Risks of Ethereum ETFs?

Despite offering more access to the crypto market, Ethereum ETFs can be more volatile than other types of ETFs, are subject to regulatory changes and scrutiny, and can be under the threat of tracking errors since some note that they do not perfectly track Ethereum prices due to high operational costs.

How to Trade Ethereum ETF CFDs

ETF CFDs are derivative agreements between two parties that allow them to speculate on the price movements of ETFs without owning the underlying assets.

In simpler terms, ETH ETF CFDs enable traders to potentially profit from both rising and falling ETH prices, depending on their position and market direction since a trader can also experience losses if the market moves against their position.

A key feature of these contracts is leverage, which means that both gains and losses are magnified using a smaller amount of capital, known as margin.

If you're interested in CFD trading, you can learn more from our article and video, “What Is CFD Trading?”

Trading Ethereum ETF CFDs with Plus500

Plus500 trading platforms offer a variety of Ethereum ETF CFDs, including:

• ARK 21Shares Active Ethereum Futures Strategy ETF
• VanEck Ethereum Trust
• Invesco Galaxy Ethereum ETF
• Bitwise Ethereum Strategy ETF
• Grayscale Ethereum ETF
• Fidelity Ethereum ETF Fund
• BlackRock's iShares Ethereum Trust
• Franklin Templeton Franklin Ethereum ETF

Steps to Trade Ethereum ETF CFDs with Plus500

1. Visit the Plus500 website.
2. Open a trading account.
3. Use the search bar to navigate to the ETF section and find your preferred Ethereum ETF. Select the Ethereum ETF CFD and open a buy or sell trade based on your trading strategy.
4. Monitor Ethereum ETF CFD prices on the platform.

If ETF CFDs suit your trading style, you can trade them with Plus500.

Conclusion

In conclusion, trading Ethereum ETF CFDs offers an opportunity to speculate on the price movements of Ethereum without owning the actual asset. With the leverage provided by CFD trading, you can amplify both potential gains and losses, making it crucial to understand the risks involved. By utilising platforms like Plus500, you can access a wide range of Ethereum ETF CFDs and execute trades based on your market predictions. Ensure you are well-informed and consider your financial situation before engaging in CFD trading.

FAQs

What is an ETH ETF?

An ETH ETF is an investment product that is traded on stock exchanges and either derives its value directly from Ether prices or Ether futures prices.

What is the symbol for Ethereum ETF?

The symbol for Ethereum ETF differs depending on the type of ETF. Some popular Ethereum ETF types include ARK 21Shares Active Ethereum Futures Strategy ETF, BlackRock's iShares Ethereum Trust, and Franklin Templeton Franklin Ethereum ETF.

Is ETH ETF approved?

Yes, the US SEC approved multiple types of ETH ETFs in 2024.

Is there an Ethereum spot in an ETF?

Yes, there are spot Ethereum ETFs.

How can I trade Ethereum ETF CFDs?

You can trade Ethereum ETFs with CFDs on the Plus500 platform.

Other Helpful Resources

• “Why Trade Cryptocurrency CFDs?” (Article)
• “What Is Cryptocurrency Trading?” (Article)
• “What Is the Difference Between Ethereum and Bitcoin?” (Article)
• “What Moves Ether’s Price?” (Article)
• “How to Trade Cryptocurrencies with Plus500” (Video)
• “New & Market Insights” (News articles)
• “Trading Academy” (Various types of educational materials)