US Ethereum ETFs had a mixed start to the week, with net inflows to most ETFs overshadowing large net outflows from Grayscale’s ETHE converter fund.
Data from Farside Investors Offers Ethereum (ETH) exchange-traded funds (ETFs) saw just over $162 million in total outflows on Friday, July 26, marking the third consecutive day of negative net inflows. In contrast, Bitcoin (BTC) ETFs saw just over $162 million in total outflows on Friday, July 26, marking the third consecutive day of negative net inflows. registered Net inflows reached $51.8 million on the same day, continuing a three-day positive inflow trend.
The first Ethereum exchange-traded funds (ETFs) in the United States — nine products from eight issuers — began trading on Tuesday, July 23, after being approved by the Securities and Exchange Commission in May.
First Week of ETH ETFs
In the first week of trading, most of the newly launched Ethereum ETFs saw positive inflows, with the exception of Grayscale’s ETHE, which saw net outflows of $1.51 billion. ETHE’s outflows resulted in a total weekly outflow of $341.8 million for Ethereum ETFs.
BlackRock’s ETHA token topped the list in terms of inflows, with net inflows of $442 million, followed by Bitwise’s ETHW at $265.9 million, and Fidelity’s FETH at $219.4 million.
VanEck’s ETHV and Franklin Templeton’s EZET saw smaller inflows of $35.4 million and $23.3 million, respectively. 21Shares’ CETH received just $7.5 million inflows on the day of launch and saw no inflows in the next three trading days.
Grayscale’s Ethereum ETFs Explained
Major crypto asset manager Grayscale introduced two Ethereum spot exchange-traded funds (ETFs) to the market last week, trading under the ticker symbols ETHE and ETH. The Grayscale Ethereum Trust, ETHE, was initially launched in 2017 as a private offering, meaning it was only available to select investors and institutions in the U.S. Since 2019, Ethereum Trust shares have been publicly traded over-the-counter under the ticker symbol ETHE. ETHE’s OTC trading came with a 6-month holding period. However, since ETHE’s conversion to a spot Ethereum ETF last week, investors have gained the ability to sell their holdings more freely.
ETHE’s 2.5% management fee — which is relatively high compared to the 0.25% or less fees charged by other ETF issuers — has prompted investors to switch to competing products with lower fees, leading to outflows from Grayscale’s fund. This is very similar to what happened with Grayscale’s Bitcoin Trust (GBTC), which also converted to a BTC ETF in January and then saw outflows of more than $5 billion in the first month after the conversion.
Likely anticipating this dynamic, Grayscale launched another ETF product this week, the Ethereum Mini Trust (under the ticker ETH). The new product features a competitive fee of 0.15%, making it one of the most affordable spot Ethereum funds in the United States. In contrast to ETHE, the Grayscale Mini Trust saw inflows every trading day over the past week, totaling $164 million.
Grayscale’s ETHE, which held about $10 billion in assets (2.9 million ETH) before converting to an ETF, has allocated $9.2 billion to its ETHE ETF and over $1 billion to its ETH fund.
The ETHE outflows, coupled with a more than 6% drop in Ethereum price since the ETFs launched, have reduced Grayscale Ethereum Trust’s assets under management to roughly $7.46 billion (2.28 million ETH), its report said. Fund page.
Ethereum ETFs vs Bitcoin ETFs: Week 1
It’s still early days, and if the trend of Grayscale’s Bitcoin ETF is any indication, net outflows from Ethereum could slow. However, with net outflows averaging around $378 million per trading day over the past week, Ethereum assets could be exhausted within a month.
In terms of Grayscale’s influence, the big difference between GBTC and ETHE is that GBTC shares were trading at a discount to the spot price of BTC when the GBTC ETF product launched. By contrast, ETHE’s “discount” — or the difference between the ETHE share price and the spot price of ETH — had closed by the time the spot Ethereum ETFs launched, which partly explains the stronger incentive to exit the fund.
Additionally, Bitcoin’s price surged ahead of the launch of the Bitcoin spot ETF in January, nearly doubling after approval expectations increased in October. Ethereum, by contrast, has been on the decline, falling more than 15% since the Ethereum spot ETF was first approved on May 23.
“The main difference for me is the relatively large flow of ETHE. I think GBTC didn’t have that on day one because it was still at a huge discount when it launched,” male Comparing outflows from producers, James Seyfrit, an ETF analyst at Bloomberg, says:
The nine newly launched Ethereum ETFs saw a combined net inflow of $106.7 million on their first day of trading, July 23, compared to $628 million in inflows for Bitcoin ETFs on their debut, according to Data From SoSoValue
In terms of trading volume, ETH ETFs saw around $1.1 billion in trades on their first day, while BTC ETFs saw $4.66 billion in trading volume on their opening day.
During the first week, Ethereum ETFs generated a total trading volume of around $4.05 billion, compared to $7.85 billion for Bitcoin ETFs in their first week.
Analysts expect Ethereum ETFs to attract inflows between 6% and 48% of the inflows seen by Bitcoin ETFs in the first six months of the year. This estimate suggests total inflows to Ethereum ETFs could reach between $1 trillion and $7.5 trillion by late January 2025.
At the time of writing, ETH, the second-largest cryptocurrency, is trading at $3,280. Its market cap is around $393 billion, with a 24-hour trading volume of nearly $14.4 billion.