ethereum spot exchange-traded funds, or ETFs, saw seven consecutive days of outflows and lost more than $5.7 million in assets on Friday, Aug. 23, bringing the cumulative figure to $464 million, data from SoSoValue shows.
The cumulative net assets locked in these ethereum (eth) ETFs amount to approximately $7.65 billion.
The Grayscale ethereum Trust has $5 billion, followed by the Grayscale Mini ethereum Trust with $1.01 billion. They are followed by ETFs from Blackrock, Fidelity, Bitwise and VanEck.
Reluctance of institutional investors
In a crypto” target=”_blank” rel=””>Note for BloombergCryptocurrency analyst Noelle Acheson noted that many institutional investors are a bit hesitant to invest in ethereum ETFs and prefer to focus on bitcoin (btc) for their diversification efforts.
However, he expects that Ether ETFs will likely see more inflows in the future, similar to the metal industry, where Gold ETF They hold more than $100 billion in assets, while those tracking silver have less than $20 billion.
The opportunity cost
The other reason ethereum ETFs are struggling is the opportunity to hold them compared to buying Ether.
Buyers of the cheapest Ether ETF (Grayscale Mini ethereum) will pay a small expense fee of 0.15%. However, they will also avoid making money through staking.
Data from ethereum-2-0″ target=”_blank” rel=””>Rewards for participation shows that ethereum yields about 3% or $300 if you invest $10,000 in it.
Data shows that ethereum net staking flow has increased in 20 of the past 30 days, reaching over $93.7 billion. Therefore, since Ether ETFs track ethereum prices, many investors are opting for Ether.
ethereum underperforms bitcoin
<img loading="lazy" decoding="async" width="3574" height="1982" src="https://crypto.news/app/uploads/2024/08/eth-vs-bitcoin.png” alt=”ethereum vs bitcoin“/>
Another likely reason is that bitcoin is outperforming Ether this year. It is up more than 45% while eth is up less than 20%.
This performance is likely due to ethereum facing substantial competition from Solana (SOL) and Tron (TRX).
Tron has emerged as a major player in stablecoin transactions, handling daily volumes of over $40 billion. Similarly, Solana has seen substantial traction due to its meme coins. As a result, in July, Solana was the largest chain in DEX volumes, Managing more than $58 billion.
The performance of the ethereum ETF will likely be a red flag for financial services firms considering launching other altcoin ETFs like Solana and Avalanche.
