Ethereum’s Potential to Mirror Bitcoin ETF Inflows of $16 Billion
Spot Bitcoin ETFs are experiencing strong performance as their inflows increase, attracting both institutional and retail investors.
Recent data reveals that ETFs introduced earlier this year have amassed more than $16.16 billion in inflows in the current year, surpassing Bloomberg’s estimated range of $12 billion to $15 billion over 12 months.
Among the leading Bitcoin ETFs is Blackrock’s iShares Bitcoin Trust (IBIT), which has acquired over 316,000 coins valued at over $18 billion. Following closely is Fidelity’s Wise Origin Bitcoin Fund (FBTC) with over 176,000 coins. Other notable Bitcoin ETFs include Cathie Wood’s ARKB, Bitwise’s BITB, and Invesco’s BTCO, holding 47,765, 39,420, and 7,197 coins, respectively.
In contrast, the Grayscale Bitcoin Trust (GBTC), once the largest Bitcoin ETF, has experienced a significant outflow, shedding over 18,000 coins this year. This decline is attributed to its high fees, boasting an expense ratio of 1.50%, compared to Blackrock’s IBIT, which charges a mere 0.25%. For instance, a $100,000 investment in GBTC incurs $1,500 in annual fees, whereas the same amount in IBIT would only cost $250.
Moreover, significant institutional investors have entered the Bitcoin ETF market. Reports indicate that funds like Millenium Management, Susquehanna, Horizon Kinetics, and Jane Street have purchased Bitcoin ETFs. Other prominent entities include Fortress Investment, Apollo Global, and Farallon Capital.
Millennium, a $68 billion fund managed by billionaire Izzy Englander, and Apollo Global, a leading global private equity firm, are among the notable investors. Susquehanna, owned by a Trump ally and a major investor in TikTok, has also made significant moves in the market.
As the spotlight shines on Bitcoin ETFs, attention shifts to the potential success of Ethereum ETFs awaiting approval. Analysts anticipate approval this month, with expectations high given Ethereum’s historical outperformance compared to Bitcoin. Over the past five years, Ethereum has surged by 1,654%, while Bitcoin has seen a 587% increase in the same period.
Ethereum’s liquidity in the cryptocurrency market is notable, with Grayscale Ethereum Trust (ETHE) accumulating nearly $10 billion in assets. However, the fund carries a management fee of 2.50%, making it relatively expensive.
Spot Ethereum ETFs are poised to attract institutional investors, particularly those grappling with managing cold wallet keys. Retail investors entering these funds will incur fees and forego staking rewards. Most funds are anticipated to charge an expense ratio of 0.25%. Data indicates that Ethereum boasts an annual yield of about 3.26%, potentially outperforming ETF holders.
In conclusion, while Ethereum ETFs hold promise, Bitcoin continues to lead in terms of asset inflows, suggesting that spot ETH ETFs may lag behind their Bitcoin counterparts in this aspect.
