The US-traded spot Ethereum (ETH) exchange-traded funds (ETFs) experienced negative net flows of $476 million in the first month of trading. This was in stark contrast to the strong performance of spot Bitcoin (BTC) ETFs, which saw significant inflows despite the outflows experienced by Grayscale’s ETHE. Analysts attribute this disparity to factors such as Bitcoin’s first mover advantage, the absence of staking options in Ethereum ETFs, and lower liquidity in the Ethereum market. However, some Ethereum ETFs showed signs of recovery towards the end of the month.
Grayscale’s ETHE saw significant outflows of nearly $2.6 billion in its first month, similar to its Bitcoin trust GBTC. Despite this, other Ethereum ETFs like BlackRock’s ETHA and Fidelity’s FETH still managed to attract significant inflows. BlackRock’s ETHA surpassed $1 billion in inflows, making it the seventh-largest ETF by year-to-date flows, while Fidelity’s FETH recorded inflows of approximately $393 million, making it the 19th largest ETF by year-to-date flows. Bitwise’s ETHW was the third and last US-traded Ethereum ETF to capture over $300 million in inflows during its first year.
Despite the challenges faced by Ethereum ETFs, there is optimism that the outflows will not continue indefinitely. Bloomberg senior ETF analyst Eric Balchunas believes that the newly launched ETFs will eventually see inflows catch up to the outflows. He stated, “But the good news is unlock will end, there’s light at the end of the tunnel.” If the total inflows of US-traded Ethereum ETFs are considered as one product, it would be the fourth-largest exchange-traded fund by 2024’s flows. Overall, while Ethereum ETFs faced initial difficulties, there is hope for future growth and stability in the market.
In conclusion, the performance of US-traded spot Ethereum exchange-traded funds in their first month of trading saw negative net flows, in contrast to the success of spot Bitcoin ETFs. Despite challenges such as Bitcoin’s first mover advantage and lower liquidity in the Ethereum market, some Ethereum ETFs showed signs of recovery towards the end of the month. Grayscale’s ETHE saw significant outflows, but other Ethereum ETFs like BlackRock’s ETHA and Fidelity’s FETH still attracted significant inflows. There is optimism for the future, with expectations that the newly launched ETFs will eventually see inflows catch up to the outflows and contribute to the growth of the Ethereum market.
