Ethereum ETFs Experience Successful Launch on US Exchanges

The investment companies BlackRock, Bitwise Investments, and Fidelity have positioned themselves as frontrunners in US Exchange Traded Funds (ETFs) for Ethereum, the world's second-largest cryptocurrency. On the first trading day, the funds recorded significant inflows of approximately 267 million US dollars, 204 million US dollars, and 71 million US dollars respectively. Meanwhile, investors withdrew around 484 million US dollars from the established but more expensive competitor Grayscale Investments, according to Bloomberg Intelligence data. In total, the nine new ETFs, which invest in the native tokens of the Ethereum blockchain, brought in about 108 million US dollars on their first trading day and generated a trading volume of around 1.1 billion US dollars. This marked a firmer foothold for the crypto markets in the traditional financial sector following the introduction of the first spot Bitcoin ETFs in January. However, the inflows for Ethereum ETFs remain significantly behind those of Bitcoin ETFs, which impressed with about 655 million US dollars and a trading volume of around 4.7 billion US dollars on their first day. Traders and executives emphasize that Ethereum is unlikely to achieve Bitcoin's spectacular performance as it is less well-known and has a different function and investment history. While Bitcoin's market capitalization stands at about 1.3 trillion US dollars, Ethereum's is around 412 billion US dollars. Ethereum serves as a platform for the development of new crypto projects, and its native token, Ether, can be used to earn returns through "staking." However, the US Securities and Exchange Commission (SEC) has not yet clarified whether staking qualifies as a securities activity, which could exclude ETF issuers from this practice. CCData, a data analysis provider, highlighted that inflows into Ethereum ETFs match expectations of around 20 percent of the assets under management for spot Bitcoin ETFs. Grayscale, which converted its Ethereum Trust into an ETF, retains its management fee of 2.5 percent—an amount significantly higher than the fees of its competitors. Additionally, Grayscale introduced a more cost-effective "mini" Ether ETF, which raised around 15 million US dollars. The approval of the Ethereum ETFs followed a surprising decision by the SEC in May. Zach Pandl, head of Grayscale research, noted that investors might underestimate the significance of this milestone for the current market cycle and the long-term development of the crypto industry. According to CCData forecasts, analysts expect Ethereum ETFs to reach a volume of over 3.5 billion US dollars within the next six months, with estimates ranging from 1 billion to 7.5 billion US dollars. By comparison, Bitcoin ETFs have collected more than 17 billion US dollars since their debut in January, with BlackRock's iShares Bitcoin Trust now managing assets of around 22 billion US dollars. Since the beginning of 2024, the prices of Bitcoin and Ether have risen by approximately 50 percent and 45 percent, respectively.