Spot Ethereum exchange-traded funds (ETFs) saw over $100 million in net inflows on their first trading day, July 23.
Spot Ethereum exchange-traded funds (ETFs) saw over $100 million in net inflows on their first trading day, July 23. While this strong start is notable, it falls short of the impressive debut of Bitcoin ETFs in January, and analysts suggest Ether ETFs might face more challenges in gaining traction among traditional investors.
The initial inflows for Ether ETFs ranged between 10% to 20% of what Bitcoin ETFs achieved on their first day. This outcome 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 major issuer of both BTC and ETH ETFs, noted, "The Bitcoin Spot ETF has set new standards as the most successful ETF launch in financial history."
Fritz pointed out that Bitcoin's narrative as an emerging store of value is simpler and more widely understood, whereas Ethereum's value proposition is more complex, requiring more educational efforts to attract investors. Despite these challenges, Fritz remains optimistic about Ethereum's potential to draw significant institutional interest.
The strong initial inflows into Ether ETFs helped ease market concerns surrounding 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" suggests 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 the pack in terms of inflows. According to Bloomberg data, 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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