Bitwise CEO Hunter Horsley has explained why he believes recently launched ethereum exchange-traded funds (ETFs) have seen significantly lower trading volumes and inflows compared to their bitcoin counterparts.
On October 21 x.com/HHorsley/status/1848132665276235873″>mail At x, Horsley acknowledged that ethereum ETFs have underperformed, but noted that his firm's funds, BlackRock and Fidelity, are still among the 25 fastest-growing new ETPs this year.
SoSoValue data shows that BlackRock's ETHA has attracted $1.45 billion in net inflows, while Fidelity's FETH and Bitwise's ETHW have seen inflows of $498 million and $321 million, respectively.
Overall, the data shows that ethereum ETFs have seen negative flows of approximately $500 million thanks to significant outflows from the Grayscale ethereum Trust and tepid demand from the other eth funds.
Why ethereum ETFs Are Struggling
Horsley highlighted several reasons behind the slow start of ethereum ETFs and explained that a key factor affecting the products was the timing of their launch.
According to him, ethereum ETFs were launched during the summer, a traditionally slow investment period during which investors monitor market activity rather than taking on new projects.
Additionally, ethereum ETFs debuted in a relatively flat market, while bitcoin ETFs came onto the scene during a bull market, attracting more attention and investment. Horsley noted that many investors were still focused on bitcoin when ethereum ETFs launched, making it difficult for ethereum to gain attention.
He explained:
“For many traditional investors, it has been and continues to take some time to figure out how to incorporate bitcoin after the launch of ETPs. ethereum arriving before it was resolved made it difficult to pay attention to it.”
What about betting?
Horsley also addressed concerns about whether the lack of staking feature was significantly impacting ethereum ETFs.
The Bitwise CEO stated that he does not believe the lack of staking returns is a major issue, noting that the majority of eth holders are not currently staking their assets.
However, Horsley highlighted the success of Bitwise's European franchise, which offers a fund (ET32) that provides exposure to ethereum while also capturing staking rewards. He said this fund has been “growing very well” and that a similar feature would benefit US-based funds.
Staking is a critical element of ethereum's proof-of-stake (PoS) system, where users lock their ethereum to validate transactions and earn rewards. However, the US Securities and Exchange Commission (SEC) has expressed concern that staking services may qualify as unregistered securities offerings and has taken legal action against crypto platforms like Kraken.
Unsurprisingly, ETF issuers delisted bets from their funds in response to these legal risks.
Despite these challenges, Horsley emphasized that it is too early to judge the long-term potential of ethereum ETPs. He believes that “the story of ethereum ETPs is just beginning.”
