Finimize - 👀 Time for ether ETFs

What’s going on here?

The US Securities and Exchange Commission (SEC) approved a rule change that could bring about ether spot exchange-traded funds (ETFs), a similar move to the one that sparked bitcoin’s rally.

What does this mean?

Ether spot ETFs would let investors buy into the world’s second-biggest cryptocurrency without directly owning the coins or dealing with the complex storage of them. Now, the SEC has approved applications from various exchanges to list ether ETFs by BlackRock, Fidelity, Invesco, and Ark Invest. But the funds still need to go through another round of approval – and even if they pass that, there’s no word on a launch date yet.

Why should I care?

Zooming out: Slow and steady can win the race.

The SEC has been slow to approve crypto investments, wary of the industry’s compliance breaches and rampant fraud scandals. But there’s clearly a market for them. ETFs for bitcoin – the world’s biggest cryptocurrency – were only approved six months ago, and FactSet indicates that they’ve already raked in over $12 billion. Although, ether ETFs probably won’t reach the same heights. The crypto itself is much smaller than bitcoin, with the Grayscale Ethereum trust less than half the size of the bitcoin one from before the launch. Plus, the SEC hasn’t approved staking – a process that lets investors earn interest by locking up their crypto – for either coin, so ether can’t rely on an advantage there to close the gap.

The bigger picture: Shoot for the moon.

Mind you, even a fraction of bitcoin’s rally would be a big step up for ether – and that’s not unlikely by any means. Bitcoin spot ETFs caused a stir because, unlike bitcoin “futures” products, they actually hold bitcoin, and the same would be true for ether’s lineup. That’s probably why the mere anticipation has sent ether's price up by over 20% since Monday, meaning it’s climbed more than 60% since the start of the year.

What’s going on here?

One of the world’s biggest real estate trusts put a hard limit on how much investors can withdraw.

What does this mean?

Rapidly rising interest rates have damaged real estate valuations, leaving owners struggling to sell property at decent prices. Private equity firm Starwood Capital Group has seen the effect on its $10 billion real estate income fund (SREIT). Recently, more investors have been trying to take their money and run. So Starwood has “locked the gates”: instead of allowing 2% of the fund’s assets to be sold each month, it’s reduced the limit to 0.33%. The idea is that interest rates will eventually fall, bolstering real estate prices and benefiting those who stuck around. But with inflation looking stubborn, investors may be holding their breath for some time.

Why should I care?

Zooming in: From red to, uh, even more red.

SREIT has piled up around $15 billion of debt while buying real estate, an intimidating figure next to the $25 billion it holds in total assets. A lot of that debt would’ve been borrowed when interest rates were low and building prices were rising, making it a cheap way to invest in the business. But now that the costs of borrowing and servicing repayments are on the rise, while property prices are falling, SREIT would likely make painful losses if it sold off real estate at the market’s current prices.

The bigger picture: It’s not too good to be true.

Folks can now get up to 5% interest just for leaving their cash to sit in a savings account, so you can’t blame them for ditching higher risk investments. Remember, higher interest rates reduce company valuations and dent stock prices. Even private companies and assets – which had recently been enjoying a bout of popularity among institutional investors – have been affected, rarely fetching a price worth selling for.