Ethereum
ETH ETF trading volume surpasses $600 million in first half of the day
The eight recently launched Ethereum Spot (ETH) Exchange-traded funds (ETFs) saw nearly $600 million in volume in the first half of their first day of trading, according to Bloomberg data.
The race is led by Grayscale’s Ethereum Trust (ETHE), which had $250 million worth of shares traded as of 12:30 p.m. ET. BlackRock’s iShares Ethereum Trust (ETHA) is in second place with about $130 million.
Fidelity’s Advantage Ether ETF had about $77 million in volume, while Bitwise’s Ethereum ETF saw $66 million.
“We assume that $ETHE volume is primarily outflows,” Eric Balchunas, senior ETF analyst at Bloomberg Intelligence, wrote in a statement. job on X. Grayscale’s ETHE, like its Bitcoin Trust (GBTC), entered the race with over $9 billion in assets, giving rise to the idea that much of its volume is due to outflows.
At the lower end of the volume spectrum were Invesco and 21Shares, whose ether ETFs after four hours of trading had yet to hit the $10 million mark.
If volume continues at this pace, the newly launched ETFs are on track to hit about $940 million on their first day of trading, according to James Seyffart, ETF analyst at Bloomberg Intelligence. That would be just over 20% of the volume Bitcoin spot ETFs saw on their first day.
Analysts predict that demand for Ether ETFs will be at most 20% of that for Bitcoin ETFs for several reasons, including lack of name recognition and the inability to stake the cryptocurrency when purchasing shares of the funds.
Another factor could be ether’s low funding rate, according to 10x Research founder Markus Thielen, who says bitcoin’s funding rate when the ETF launched in January was around 15% and rose to 70% in February.
“This attracted many institutional arbitrage funds, which bought the ETFs and shorted the futures contracts against them to pocket the spread,” he wrote Tuesday. “As we have pointed out, their buying fueled bullish sentiment in a self-reinforcing process.”
Ethereum’s current funding rate, Thielen said, is significantly lower, between 7% and 9%, which may be too low for institutions to consider using the funds for arbitrage investing, especially since interest rates are currently at 5%.
“Unlike the strong Bitcoin Spot ETF flows in February, Ether ETF flows are unlikely to attract the arbitrage flows essential to driving positive sentiment,” Thielen wrote.