Spot Ethereum exchange-traded funds (ETFs) garnered over $100 million in net inflows on their first trading day, July 23. While this strong performance is noteworthy, it pales compared to the landmark debut of Bitcoin ETFs in January. Analysts suggest that Ether ETFs might encounter more hurdles in gaining traction among traditional investors.
Initial inflows for Ether ETFs were between 10% to 20% of what Bitcoin ETFs achieved on their inaugural day. This disparity aligns with expectations, given Bitcoin’s larger market capitalization, but raises concerns about Ether’s appeal to traditional investors. Adrian Fritz, head of research at 21Shares, a prominent issuer of both BTC and ETH ETFs, remarked, “The Bitcoin Spot ETF has set new standards as the most successful ETF launch in financial history.”
Fritz noted that Bitcoin’s narrative as an emerging store of value is simpler and more widely understood, while Ethereum’s value proposition is more complex, necessitating greater educational efforts to attract investors. Despite these challenges, Fritz remains optimistic about Ethereum’s potential to attract significant institutional interest.
The robust initial inflows into Ether ETFs helped alleviate market concerns regarding their launch. The Ethereum Volmex Implied Volatility (EVIV) index, which measures the 30-day expected volatility of ETH, dropped by 4 points to around 65 within 24 hours of the ETFs’ listing, according to CoinMarketCap. Cole Kennelly, founder of Volmex Finance, explained that the market had been pricing in uncertainty before the ETF launch, but the subsequent “volatility crush” indicates that ETF flows might stabilize ETH spot markets.
Among the new spot Ether ETFs, BlackRock’s iShares Ethereum Trust ETF (ETHA), the Bitwise Ethereum ETF (ETHW), and the Fidelity Ethereum Fund (FETH) led in terms of inflows. Bloomberg data shows these funds pulled in approximately $266 million, $204 million, and $71 million, respectively.
However, these inflows were partially offset by significant outflows from Grayscale’s legacy fund, ETHE, which saw around $484 million in outflows. Launched in 2017 under a different fund structure, ETHE charges a management fee of 2.5%, significantly higher than the newer spot ETH funds. In total, the eight new spot Ether ETFs listed on July 23 attracted approximately $590 million in net inflows.
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