Ethereum

Spot

<h4>Is it what you expected that it would be? Or are you rather disappointed with how this $ETH spot ETF market develops? Some good questions that I also want to have answered.&nbsp;The $ETH spot ETFs launched in July 2024. So, it would be fair to give them some time and see how they do.</h4> 
However, the honeymoon period is over, and it’s time to show some results. Unfortunately, the results don’t look that great. Outflows dominate over inflows. This is in contrast to the $BTC spot ETFs. They have a net positive inflow. So, let’s take a closer look at what’s going on with the $ETH spot ETFs. 
<h5>$ETH Spot ETFs History</h5> 
Let’s put the development of the $ETH spot ETF in perspective. So, it’s good to look back at how this spot ETF came into being. Now, the SEC isn’t the most crypto-friendly US government institution. Nonetheless, in a surprise move, in January this year <a href="https://www.sec.gov/newsroom/speeches-statements/gensler-statement-spot-bitcoin-011023" target="_blank" rel="noopener">it approved $BTC spot ETFs</a>. 
This move also spurred interest in an $ETH spot ETF. No surprise there, as $ETH is the second-biggest asset measured by market cap. As a result of the <a href="https://www.altcoinbuzz.io/?s=btc+spot+etf" target="_blank" rel="noopener">$BTC spot ETF</a> approval, both $BTC and $ETH rallied. 
$ETH went from $2,219 on 26th January to $4.070 on March 12th. <a href="https://www.coingecko.com/en/coins/bitcoin" target="_blank" rel="noopener">$BTC</a> had a similar rally, from $39.938 to a new ATH on 14th March of $73.737. However, both lost steam from those moments onward. The current $ETH price is $2.512. It lost more ground than $BTC. 
Back to the SEC. In an even more surprising move, in May, <a href="https://www.ft.com/content/f36d7eeb-03d6-4dab-909a-d5d4524a4edb" target="_blank" rel="noopener">it approved</a> no less than 9 $ETH spot ETFs funds. These began trading in July 2024. 
<blockquote class="twitter-tweet"> 
 BOOM!! APPROVED! There it is. The SEC just approved spot <a href="https://twitter.com/hashtag/Ethereum?src=hash&amp;ref_src=twsrc%5Etfw">#Ethereum</a> ETFs. What a turn of events. It’s really happening. 
 h/t <a href="https://twitter.com/PhoenixTrades_?ref_src=twsrc%5Etfw">@PhoenixTrades_</a> <a href="https://t.co/KQ39mDyCbT">pic.twitter.com/KQ39mDyCbT</a> 
 — James Seyffart (@JSeyff) <a href="https://twitter.com/JSeyff/status/1793750784624214517?ref_src=twsrc%5Etfw">May 23, 2024</a>
</blockquote> 
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Now, as you may know, a spot ETF is a regulated investment tool. It allows you to trade in the underlying asset, without having to own it. Especially in the world of crypto, that can be convenient. If you buy a spot ETF, you don’t need a crypto wallet. For many people, these are still a hurdle. 
There’s also no need to hold the underlying asset. The spot ETF fund manager holds the underlying asset. For example, if they sell for $100 million worth of $ETH spot ETFs, they need to hold at least $100 million of $ETH. It’s like collateral. 
Spot ETFs tend to target institutions. So, that’s good news. However, retail can also buy these $ETH spot ETFs. 
<h5>Reasons Why $ETH Spot ETFs Are Slow</h5> 
There are various reasons why $ETH spot ETFs are slow. So, it’s time to look at these reasons. 
<ul> 
 <li style="font-weight: 400;" aria-level="1">Staking — You can <a href="https://ethereum.org/en/staking/" target="_blank" rel="noopener">stake $ETH</a> and receive 1-5% APY on your staked $ETH. However, you can’t stake an $ETH spot ETF. So, $ETH spot ETF holders lose out on this extra, passive income.</li> 
 <li style="font-weight: 400;" aria-level="1">The ETH/BTC chart — <a href="https://www.tradingview.com/chart/?symbol=BINANCE%3AETHBTC" target="_blank" rel="noopener">This chart</a> is down 50% over the last 2 years.</li> 
 <li style="font-weight: 400;" aria-level="1">Decreased user activity. — Many <a href="https://app.debridge.finance/analytics?start=03-06-2024&amp;end=03-09-2024" target="_blank" rel="noopener">former Ethereum users move</a> to L2s or other, cheaper and faster L1s. For example, the <a href="https://www.tradingview.com/symbols/SOLETH/" target="_blank" rel="noopener">$SOL/$ETH chart</a> is up by 346%.&nbsp;</li> 
 <li style="font-weight: 400;" aria-level="1">$ETH became inflationary —It was deflationary for a while, but not anymore. Ethereum mints more $ETH than it burns.</li> 
</ul> 
<img decoding="async" class="aligncenter wp-image-150193 size-full" src="https://www.altcoinbuzz.io/wp-content/uploads/2024/09/FireShot-Pro-Webpage-Capture-548-Ethereum-Turned-Inflationary-In-2024First-Time-Since-2022-www.coingecko.com_.jpg" alt="$ETH spot ETFs" width="878" height="869" srcset="https://www.altcoinbuzz.io/wp-content/uploads/2024/09/FireShot-Pro-Webpage-Capture-548-Ethereum-Turned-Inflationary-In-2024First-Time-Since-2022-www.coingecko.com_.jpg 878w, https://www.altcoinbuzz.io/wp-content/uploads/2024/09/FireShot-Pro-Webpage-Capture-548-Ethereum-Turned-Inflationary-In-2024First-Time-Since-2022-www.coingecko.com_-300x297.jpg 300w, https://www.altcoinbuzz.io/wp-content/uploads/2024/09/FireShot-Pro-Webpage-Capture-548-Ethereum-Turned-Inflationary-In-2024First-Time-Since-2022-www.coingecko.com_-768x760.jpg 768w, https://www.altcoinbuzz.io/wp-content/uploads/2024/09/FireShot-Pro-Webpage-Capture-548-Ethereum-Turned-Inflationary-In-2024First-Time-Since-2022-www.coingecko.com_-424x420.jpg 424w, https://www.altcoinbuzz.io/wp-content/uploads/2024/09/FireShot-Pro-Webpage-Capture-548-Ethereum-Turned-Inflationary-In-2024First-Time-Since-2022-www.coingecko.com_-696x689.jpg 696w" sizes="(max-width: 878px) 100vw, 878px"> 
Source: <a href="https://www.coingecko.com/research/publications/ethereum-burn-statistics" target="_blank" rel="noopener">CoinGecko</a> 
<ul> 
 <li style="font-weight: 400;" aria-level="1">$ETH max supply — The $ETH max supply has no limit. If there’s enough demand, $ETH can mint more to meet that demand. This is in contrast to Bitcoin, which has a finite supply of 21 million $BTC.&nbsp;</li> 
 <li style="font-weight: 400;" aria-level="1">Fee revenue — Ethereum recently saw the proto-danksharding upgrade. This reduced <a href="https://l2fees.info/" target="_blank" rel="noopener">Layer 2 transaction fees</a> even more. As a result, Ethereum generates less revenue.</li> 
 <li style="font-weight: 400;" aria-level="1">$ETH spot ETF outflows — As already mentioned, there’s <a href="https://sosovalue.com/assets/etf/us-eth-spot" target="_blank" rel="noopener">a net deficit</a> between in- and outflows.</li> 
</ul> 
So, as you can see, there’s a lot going on at <a href="https://www.altcoinbuzz.io/?s=ethereum" target="_blank" rel="noopener">Ethereum</a>. It’s also not all positive news. It also doesn’t help if Vitalik Buterin transfers 800 $ETH worth $2 million USD to a multisig wallet. Raising even more reasons for speculation of why he did this. 
<blockquote class="twitter-tweet"> 
 vitalik.eth(<a href="https://twitter.com/VitalikButerin?ref_src=twsrc%5Etfw">@VitalikButerin</a>) transferred 800 <a href="https://twitter.com/search?q=%24ETH&amp;src=ctag&amp;ref_src=twsrc%5Etfw">$ETH</a>($2.01M) to a multisig wallet again 40 minutes ago. 
 The multisig wallet swapped 190 <a href="https://twitter.com/search?q=%24ETH&amp;src=ctag&amp;ref_src=twsrc%5Etfw">$ETH</a> for 477K <a href="https://twitter.com/search?q=%24USDC&amp;src=ctag&amp;ref_src=twsrc%5Etfw">$USDC</a> later. 
 On Aug 9, <a href="https://twitter.com/hashtag/Vitalik?src=hash&amp;ref_src=twsrc%5Etfw">#Vitalik</a> also transferred 3,000 <a href="https://twitter.com/search?q=%24ETH&amp;src=ctag&amp;ref_src=twsrc%5Etfw">$ETH</a>($8.04M) to this multisig wallet.<a href="https://t.co/81Vf39bvbL">https://t.co/81Vf39bvbL</a> <a href="https://t.co/6IlwtcqvPg">pic.twitter.com/6IlwtcqvPg</a> 
 — Lookonchain (@lookonchain) <a href="https://twitter.com/lookonchain/status/1829407124520374565?ref_src=twsrc%5Etfw">August 30, 2024</a>
</blockquote> 
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<h5>Are the $ETH Spot ETFs a Failure?</h5> 
So, we come to the part to see if the $ETH spot ETF is a failure. I just mentioned plenty of reasons that can or have influenced the reason this spot ETF is slow. The main indicator is the in- and outflow in all the 9 Funds. We see a net negative inflow of $477 million USD. 
However, the main culprit is the <a href="https://sosovalue.com/bigChart/Etf_NYSE_ETHE?title=Grayscale%20Ethereum%20Trust(ETHE)&amp;coin=ETH" target="_blank" rel="noopener">Grayscale Ethereum Trust ($ETHE)</a>. That fund alone has a negative outflow of $2.56 billion USD. The other 8 fund managers all have <a href="https://www.coinglass.com/eth-etf" target="_blank" rel="noopener">positive inflows</a>. Actually, totaling a positive net inflow of $2.083 billion. That’s rather shocking, isn’t it? 
So, what is the reason for this massive outflow at the Grayscale Ethereum Trust? Well, it is rather simple. Grayscale’s fee is 2.5%. That’s 10x more than the next most expensive fee. All other fees range between 0.15% and 0.25%. People and institutions tend to choose, not with their feet, but with their wallets. 
<img decoding="async" class="aligncenter wp-image-150195 size-large" src="https://www.altcoinbuzz.io/wp-content/uploads/2024/09/FireShot-Pro-Webpage-Capture-542-SoSoValue_-Advanced-AI-Powered-Crypto-Investment-Research-Platform-sosovalue.com_-1024x463.png" alt="$ETH spot ETFs" width="696" height="315" srcset="https://www.altcoinbuzz.io/wp-content/uploads/2024/09/FireShot-Pro-Webpage-Capture-542-SoSoValue_-Advanced-AI-Powered-Crypto-Investment-Research-Platform-sosovalue.com_-1024x463.png 1024w, https://www.altcoinbuzz.io/wp-content/uploads/2024/09/FireShot-Pro-Webpage-Capture-542-SoSoValue_-Advanced-AI-Powered-Crypto-Investment-Research-Platform-sosovalue.com_-300x136.png 300w, https://www.altcoinbuzz.io/wp-content/uploads/2024/09/FireShot-Pro-Webpage-Capture-542-SoSoValue_-Advanced-AI-Powered-Crypto-Investment-Research-Platform-sosovalue.com_-768x348.png 768w, https://www.altcoinbuzz.io/wp-content/uploads/2024/09/FireShot-Pro-Webpage-Capture-542-SoSoValue_-Advanced-AI-Powered-Crypto-Investment-Research-Platform-sosovalue.com_-1536x695.png 1536w, https://www.altcoinbuzz.io/wp-content/uploads/2024/09/FireShot-Pro-Webpage-Capture-542-SoSoValue_-Advanced-AI-Powered-Crypto-Investment-Research-Platform-sosovalue.com_-928x420.png 928w, https://www.altcoinbuzz.io/wp-content/uploads/2024/09/FireShot-Pro-Webpage-Capture-542-SoSoValue_-Advanced-AI-Powered-Crypto-Investment-Research-Platform-sosovalue.com_-696x315.png 696w, https://www.altcoinbuzz.io/wp-content/uploads/2024/09/FireShot-Pro-Webpage-Capture-542-SoSoValue_-Advanced-AI-Powered-Crypto-Investment-Research-Platform-sosovalue.com_-1068x483.png 1068w, https://www.altcoinbuzz.io/wp-content/uploads/2024/09/FireShot-Pro-Webpage-Capture-542-SoSoValue_-Advanced-AI-Powered-Crypto-Investment-Research-Platform-sosovalue.com_.png 1920w" sizes="(max-width: 696px) 100vw, 696px"> 
Source: <a href="https://sosovalue.com/assets/etf/us-eth-spot" target="_blank" rel="noopener">SosoValue</a> 
So, what does this mean? Can we call the $ETH spot ETF a failure? It looks like you may have to hold your horses here.&nbsp; 
For example, we saw the Black Monday event in early August. $ETH lost around $100 million from its market cap. Its price has been struggling since mid-March. Nonetheless, demand for the $ETH spot ETF remained solid. Many see this as a long-term success indicator.&nbsp; 
These $ETH spot ETFs could well be a slow burner. Get rid of all the noise, and it shows that they’re performing rather well. So, what do you think of these $ETH spot ETFs? Are they a failure or not? 
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Are Ethereum $ETH Spot ETFs a BIG Fail?

Altcoin Buzz

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