Ethereum
US Spot-Ether ETFs Surpass $100 Million in Net Inflows in Debut
(Bloomberg) — U.S. exchange-traded funds that invest directly in Ether raised a net $107 million in their first day of trading, thanks to launches that will provide a window into mainstream demand for cryptocurrencies outside of Bitcoin.
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BlackRock Inc.’s iShares Ethereum Trust generated a net inflow of $267 million, the largest in the cohort, followed by Bitwise’s Ethereum Trust with $204 million and the Fidelity Ethereum Fund with $71 million, according to data compiled by Bloomberg.
More than $1 billion worth of shares have traded in the nine ETFs, which launched six months after U.S. regulators approved the first U.S. spot Bitcoin ETFs. They have attracted net inflows of more than $17 billion this year.
Ether is the second-largest digital asset and popular for blockchain-based financial services, but the token’s market cap is still less than a third of Bitcoin’s, prompting lower inflow expectations compared to Bitcoin ETFs.
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Bitcoin funds have benefited from a controversial narrative that presents the most important token as digital gold, an interpretation that Ether lacks. Ether funds also won’t offer so-called staking rewards for maintaining the blockchain, a yield that can be exploited by owning the token directly.
“The flows are in line with our expectations,” said Vivien Wong, a partner at cryptocurrency investor HashKey Capital. She expects net inflows of $3 billion to $5 billion to Ether wallets over the next six months.
Eight new Ether funds listed on Tuesday, while the Grayscale Ethereum Trust, created more than six years ago and the largest for Ether with $8.6 billion in assets, converted from a closed-end structure to an ETF. The conversion makes exits easier for arbitrageurs, and the product saw a net outflow of $484 million.
There is a risk that such exits could counteract the positive impact of new subscriptions, potentially putting “downward” pressure on the market, Wong said.
Bitcoin lagging behind
Ether fell less than 1% to $3,458 as of 8:41 a.m. in New York. The cryptocurrency’s 85% gain over the past year, which has seen a rally in digital assets, lags behind Bitcoin’s 125% gain, which hit a record high in March.
U.S. Ether ETFs had “a very strong first day of trading,” said Rebecca Sin, ETF analyst at Bloomberg Intelligence. She added that “the Ether market is much smaller than Bitcoin, so education is key because we are just at the beginning of a long journey.”
The story continues
In May, the U.S. Securities and Exchange Commission surprisingly moved to approve spot-Ether ETFs after reluctantly allowing Bitcoin funds following a 2023 court reversal.
The agency cracked down on the digital asset sector after the collapse of the FTX exchange, but pro-crypto Donald Trump’s push to return to the White House has sparked speculation of a friendlier climate ahead.
–With assistance from Emily Graffeo.
(Updates throughout)
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