EETH: Indirect Exposure Opportunity For Crypto Bulls

seekingalpha06-10

ProShares Ether Strategy ETF allows exposure to crypto without owning ether, with strong performance and just over $100 million in assets.EETH invests in ether futures contracts and aims to go long on...

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}\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nEETH: Indirect Exposure Opportunity For Crypto Bulls\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-06-10 21:00 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4698353-eeth-indirect-exposure-opportunity-for-crypto-bulls><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>ProShares Ether Strategy ETF allows exposure to crypto without owning ether, with strong performance and just over $100 million in assets.EETH invests in ether futures contracts and aims to go long on...</p>\n\n<a href=\"https://seekingalpha.com/article/4698353-eeth-indirect-exposure-opportunity-for-crypto-bulls\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"BK4550","symbol_name":"红杉资本持仓","start_time":0,"source_url":"https://seekingalpha.com/article/4698353-eeth-indirect-exposure-opportunity-for-crypto-bulls","article_id":"2442471758","we_media_id":null,"thumbnails":["https://static.seekingalpha.com/cdn/s3/uploads/getty_images/1907190124/image_1907190124.jpg"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2442471758","pubTimestamp":1718024400,"sourceInfo":{"source_id":"seekingalpha","name":"Seeking Alpha"},"weMediaInfo":null,"summary":"ProShares Ether Strategy ETF allows exposure to crypto without owning ether, with strong performance and just over $100 million in assets.EETH invests in ether futures contracts and aims to go long on","collect":0,"end_time":0,"defaultTopTitle":"seekingalpha.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"BK4550":"红杉资本持仓","BK4588":"碎股","FDN":"First Trust Dow Jones Internet I","EFUT":"VanEck Ethereum Strategy ETF","BK4585":"ETF&股票定投概念"},"translate_title":"EETH：加密货币多头的间接敞口机会","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"EFUT":1,"FDN":0.9},"content_text":"ProShares Ether Strategy ETF allows exposure to crypto without owning ether, with strong performance and just over $100 million in assets.EETH invests in ether futures contracts and aims to go long on ether futures, betting on an increase in price.The fund has achieved a 96% price return since its inception, outperforming ETH-USD, annualized, but investors should consider the volatility and regulatory risks of the crypto market.   Torsten Asmus The ProShares Ether Strategy ETF (NYSEARCA:EETH) is essentially a way to gain exposure to crypto without having to deal with the nitty-gritty of actually owning ether. If you’ve been on the crypto fence so far but have been generally bullish on ether, bitcoin, or even just the blockchain concept, this is one alternative to consider. EETH is the first ETF of its kind, with the objective of replicating the performance of the underlying asset: ether. It was incepted in October 2023, so we have several months of performance history, and you should note that this is a relatively small fund. Nevertheless, it’s been growing, going from about $71 million in AUM as of 3/31/24 to the current +$100 million as I write this. The expense ratio of 0.95% is definitely a little steep, considering that several bitcoin ETFs are available in the range of 0.20% to 0.25%. You can also find other ether ETFs that charge 0.66%, such as the VanEck Ethereum Strategy ETF (EFUT), but most of these have much smaller AUMs so they need to be priced more attractively to attract investor funds. EETH Strategy Explained To be clear, the fund doesn’t invest in ether itself. It invests in ether futures contracts, while retaining its cash assets in the form of short-term securities such as T-Bills. The contracts themselves are rolled over as they approach their contract dates. Another important point to note is that the fund doesn’t seek to track ether spot prices. That’s a key consideration because there’s usually a variance between spot prices and futures, and they work differently as well. Both are CFDs or contracts for difference instruments, but spot price trading is done at the current market price, while a futures contract trade is done at an agreed-upon price sometime in the future. As you’ve probably figured out, both types of CFDs are speculative, whether it’s spot or futures, but one important difference is that you can generally limit your loss to the value of the contract fees. With spot trading, there’s potentially much more to lose if price action goes against your trade, and you don’t exit quickly enough. The purpose of EETH is to go long on ether futures, so it’s essentially betting that (ETH-USD) will increase in the future, with the difference being the gain. Naturally, if it goes the other way, you could lose quite a chunk of your investment. Still, as I mentioned earlier, losses are typically lower with futures contracts because fees are generally lower than spot trade fees. That’s the case with most commodities as well. How Has EETH Performed? Looking at the fund’s 96% return since its inception at the beginning of October last year, it’s easy to be impressed. Annualized, that’s 145% - even better than the 101% annual return for ETH-USD itself! And that’s net of the expense ratio, so the only additional cost will be your transaction fee for purchasing the ETF, as well as any short-term or long-term capital gains that may apply, for taxable accounts. That tells me a couple of things. One, the fund managers have made excellent decisions on timing their ether futures contracts, and two, the current return on money-market instruments is providing a boost to total return. In a downturn, it would provide a cushion to help offset losses. The real question, however, is whether or not you believe ether will increase in price over whatever investment horizon you have in mind. If you look at the chart over the past six months, it’s amply clear that there are several forces at play, which shows up in the volatility of the underlying asset.   SA Takeaway and Conclusion Of course, one can attribute that volatility to the inherent uncertainties baked into the crypto market, but one particular positive we can take away from this is that interest levels in crypto, in general, and ether, in particular, are clearly stabilizing, if not on the rise. This can be demonstrated in various ways, such as ETH put call ratio or PCR movements over the last month. In the graph below, you can see the global ETH PCR showing overall stability despite the temporary bump toward the end of last month.   The Block That was an important timeline for crypto enthusiasts to watch because it’s right after the U.S. House of Representatives approved joint resolution 109, which if eventually passed will limit the SEC’s regulatory power over cryptocurrency markets. There’s significant skepticism about the bill ever passing into law, and the White House has made its position very clear right from the very beginning: The Administration strongly opposes passage of H.J. Res. 109, which would disrupt the Securities and Exchange Commission’s (SEC) work to protect investors in crypto-asset markets and to safeguard the broader financial system. The crypto market clearly panicked after that May 8 statement from the Biden administration, but the bill did pass through the House. Moreover, now that the President’s veto message of May 31 has been put before the House, albeit tabled until July 10, 2024, hope has again sprouted in the crypto investing world. The decline in the PCR since the beginning of June clearly shows that negative sentiment is abating. That could be a positive signal for ETFs like EETH. Although you may think that the bill wouldn’t have an immediate impact on the ETF’s performance, the fact that it could and will very likely impact the underlying asset directly makes it implicit that investors should be cognizant of these evolving dynamics around crypto regulation. As such, your stance on ETH-USD and crypto in general are key to making an investment decision. Even if you’re not keen on being directly involved in crypto trading, such ETFs give you the kind of indirect exposure you might want.   SA In summary, if you’re averse to direct crypto risks but still want to get your feet wet, an ETF like EETH might be just the vehicle for you. The fund managers are doing a great job, and you’re getting the additional benefit of your investment having a floor in the form of short-term investments. For context, (US3M) is currently yielding about 5.4%, so there’s a margin of safety here that could cushion any losses on the ETF’s futures contracts, and on the upside, it should help boost any contracts-based gains made by the ETF.  Overall, you’d need to be quite bullish on ETH-USD, and that’s what it boils down to. And since I’m transparently ambivalent on cryptocurrency, I’m rating this a Hold, particularly because I do see a potential value play for the right type of investor.","kind":null,"is_publish_news":true,"is_publish_highlight":false,"is_publish_live":null,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"","news_tag":"","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.24.2","shortVersion":"4.24.2","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2442471758"}