Spot Ether exchange-traded funds (ETFs) are off to a strong start after pulling upward of $100 million in net inflows on July 23, the funds’ first day of trading, but they fell short of Bitcoin’s epic ETF debut in January and may struggle to catch up, according to analysts who spoke with Cointelegraph.
The spot Ether (ETH) ETFs clocked inflows of some 10% to 20% of what Bitcoin (BTC) funds garnered during day one trading in January. That’s roughly in line with expectations, given BTC’s larger total market capitalization, but not enough to shake fears that ETH may be a harder sell than BTC with traditional investors, analysts said.
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“The Bitcoin Spot ETF has set new standards as the most successful ETF launch in financial history,” according to Adrian Fritz, head of research at 21Shares, an issuer of both BTC and ETH ETFs.
“The narrative of Bitcoin as an emerging store of value is simpler and largely understandable, while Ethereum’s value proposition is more complex and will require more time and greater educational efforts,” Fritz told Cointelegraph. “However, we remain confident that Ethereum will attract significant institutional interest.”
One analyst said he expects to see spot ETH ETFs attract roughly $1 billion to $2 billion in total assets under management (AUM) over the next three months. Bitcoin ETFs pulled some $12.7 billion over an equivalent timeframe, and ETH ETFs are on track to garner about 10% to 15% of that amount, Bryan Armour, director of passive strategies research at fund researcher Morningstar, told Cointelegraph.
Early trading data indicates that significant institutional interest has already materialized, Armor said, noting that day one trading saw “some big chunks of volume, and that typically indicates institutional [buyers].”
The strong inflows alleviated market anxiety around the much-anticipated ETF launch. The Ethereum Volmex Implied Volatility (EVIV) index, which measures the forward-looking 30-day expected volatility of ETH, dropped by 4 points to around 65 in the 24 hours after the ETFs were listed, according to CoinMarketCap.
“Pre-ETH ETF launch, the market was pricing in uncertainty from a potential ETH ETF inflows surprise,” Cole Kennelly, founder of crypto indexes creator Volmex Finance, told Cointelegraph. The “volatility crush” that followed the first day of trading indicates that the market may expect the ETF flows to have a stabilizing effect on ETH spot markets, Kennelly added.
Three spot Ether ETFs — BlackRock’s iShares Ethereum Trust ETF (ETHA), the Bitwise Ethereum ETF (ETHW) and the Fidelity Ethereum Fund (FETH) — are “way in front of the pack” in terms of inflows, Armour added. The funds pulled around $266 million, $204 million and $71 million in net inflows, respectively, according to data from Bloomberg.
Armour attributed the funds’ strong performance to BlackRock’s and Fidelity’s “incredible distribution networks and institutional clientele” and Bitwise’s successful courtship of crypto-native individual investors.
Those inflows were partly offset by around $484 million in outflows from Grayscale Ethereum Trust (ETHE), which launched under a different fund structure in 2017 and still charges management fees of 2.5% — about 10x the average for the newer spot ETH funds. In total, the eight new spot ETH ETFs listed on July 23 drew in some $590 million in net inflows, according to Bloomberg.
“The New Eight taking in $590m on first day is huge, more than I guessed,” Bloomberg ETF analyst Eric Balchunas said in a post on the X platform. “It needed it too bc $ETHE unlock was also bigger than I thought. Either way good to start life in the green at +$106m.”
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