The launch of ethereum spot exchange-traded funds (ETFs) has not met the high expectations set by their bitcoin counterparts, prompting industry experts to analyze the underlying reasons. Since their inception on July 23, all eth spot ETFs have seen outflows of $463 million, according to data from Farside Investors. The main culprit is Grayscale's ETHE with $2.996 million in outflows, while BlackRock has $1.258 million and Bitwise $321 million in inflows.
Why Are ethereum Spot ETFs Not Performing Better?
Hunter Horsley, CEO of Bitwise Asset Management, turned to x to shed light on the x.com/HHorsley/status/1848132665276235873″ target=”_blank” rel=”noopener nofollow”>factors affecting the performance of US Ether spot ETFs “Why didn't ethereum ETFs perform better? A question I received at an event last week,” Horsley began. “First, how do you judge success? “iShares, Fidelity and Bitwise ETPs are among the 25 fastest growing new ETPs this year,” he added.
Despite its position among the fastest-growing exchange-traded products (ETPs), Horsley identified several factors that worked against the successful launch of ethereum spot ETFs. He noted that the timing of the launch over the summer, a typically slow period for investors who “monitor but don't take on many new projects,” may have dampened immediate interest.
Furthermore, market conditions played a role: “Bull markets always attract attention. bitcoin ETPs were launched amid a bitcoin surge. Ether ETPs were launched in a sideways market.” The lack of bullish momentum in ethereum price may have contributed to the lukewarm response.
Additionally, the sequential launch of ethereum ETFs after bitcoin ETFs may have overwhelmed investors who are still acclimating to cryptocurrency assets. “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,” Horsley explained.
Nate Geraci, president of The ETF Store and co-founder of the ETF Institute, highlighted the broader success of cryptocurrency-related ETFs in 2024. “Update… Of the 525 ETFs launched in 2024, 13 of the top 25 are bitcoin or ether. related. 14 if you include the MSTR Option Strategy ETF. All 4 major ETFs consider btc. 5 of the top 7 related to cryptocurrencies. I call this masterpiece 'without demand'.”
Related reading: ethereum founder Buterin presents possible futures for the eth protocol
In response, Christopher Perkins, president of CoinFund, suggested that yield-generating products could improve appeal. “Performance would help. The total return of eth is the flagship product,” he stated. Horsley acknowledged the value of betting, but downplayed its immediate impact on the ETF's performance. “Okay, ET32 has been growing rapidly in our European franchise,” he responded.
However, Horsley also added: “I don't think the lack of betting returns is a big problem. Most eth today is directly owned so can be staked, but ~2/3 are not. But accept that it is valuable. We have an eth ETP with participation in Europe that is growing very well.”
Industry veteran Dan Tapiero, founder and CEO of 10T Holdings, remained optimistic about the future of ethereum spot ETFs. “Just wait. “They will do very well,” he said. Horsley agreed and simply said, “Okay.”
At press time, eth was trading at $2,705.
Featured image created with DALL.E, chart from TradingView.com
