Ethereum ETFs Make Strong Debut, but Grayscale’s ETHE Faces Significant Outflows

News Desk 29 July 2024

1 minute read

The recent launch of nine new spot Ethereum exchange-traded funds (ETFs) in the U.S. marked a notable shift in the market.

These ETFs, which gained approval from the Securities and Exchange Commission (SEC) in May, had a mixed start last week. While most new ETFs saw substantial inflows, Grayscale’s converted fund, ETHE, experienced significant outflows.

Leading the charge was BlackRock’s ETHA, which garnered $442 million in net inflows in its first four days. It was followed by Bitwise’s ETHW with $265.9 million and Fidelity’s FETH with $219.4 million. Other notable performers included VanEck’s ETHV, Franklin Templeton’s EZET, Invesco’s QETH, and 21Shares’ CETH, which reported inflows of $35.4 million, $23.3 million, $14.2 million, and $7.5 million, respectively.

Despite the positive reception for most of these ETFs, Grayscale’s ETHE faced a different reality. The fund, which saw over $1.5 billion in net outflows last week, had a total net outflow of $341.8 million when combined with other U.S. spot Ethereum ETFs.

Moreover, Grayscale’s ETHE had a much higher fee structure of 2.5% compared to the 0.19% to 0.25% fees of other Ethereum ETFs. Despite this, Grayscale’s ETH Mini Trust ETF (ETH), which charges the lowest fee of 0.15%, saw $164 million in net inflows. However, the substantial outflows from ETHE, combined with a drop in Ether’s price since the ETFs’ launch, reduced its assets under management to around $7.5 billion, according to The Block.

Eric Balchunas, also from Bloomberg, noted that while the new Ethereum ETFs were not as successful as the Bitcoin ETFs in offsetting Grayscale’s outflows, their inflows and volume were still healthy.

Nonetheless, one can say that in their first week, the spot Ethereum ETFs generated $4.05 billion in trading volume, representing 34% of the $11.82 billion volume recorded by Bitcoin ETFs. ETHE dominated this volume, capturing a 52% market share, followed by BlackRock’s ETHA with 21.7%. The Ethereum ETFs quickly surpassed the trading volumes of existing Ethereum futures ETF products, capturing a 99.3% market share by Friday.