Ethereum ETFs Debut Successfully, Yet Grayscale’s $484 Million Outflows Raise Eyebrows
The debut of Ethereum ETFs compared to Bitcoin ETFs on their first trading day showed a significant contrast, notably in the substantial outflow of $ETHE. This divergence was attributed to $GBTC not experiencing a similar trend on its launch day due to still being at a notable discount.
The combined assets of the ETFs now stand at $10.2 billion, with trading volumes exceeding $1.1 billion on the inaugural day. Grayscale’s ETHE leads in volume with $469.7 million, benefitting from its prior Ethereum closed-end fund transformation into an ETF in 2017. Noteworthy inflows were reported by BlackRock with $266 million, Bitwise with $204 million, and Fidelity with $71 million.
Despite a net inflow of $107 million across the funds, this figure was offset by the $484 million outflows from Grayscale’s Ethereum Trust, ETHE, as per Bloomberg data.
The introduction of ETFs has not significantly impacted Ethereum’s price, which has seen a 0.8% decrease since trading commenced, although it has surged by 17% since July 7. While some speculate that anticipation of SEC approval may be influencing prices, others attribute the growth to the increasing electoral odds of Donald Trump.
Ethereum’s market capitalization being one-third of Bitcoin’s explains the smaller inflows into its ETF compared to its rival. Factors such as the SEC’s prohibition on staking Ether in the funds have influenced investor behavior, leading more crypto-native investors to purchase Ether directly.
The modest outflows from Ethereum ETFs could be partly due to Grayscale’s $484 million outflows. In contrast, Grayscale’s Bitcoin Trust saw less than $100 million outflows on its first trading day in January, following years of share lock-ins.
Grayscale’s 2.5% fee for ETHE, higher than competitors charging 0.25% or less, contributed to the significant outflows. Despite this, industry experts view the ETF launch positively, citing 21 Shares’ Core Ethereum ETF reporting $8.7 million inflows as a successful debut compared to traditional ETF standards. The overall volume numbers were also deemed robust, indicating a promising start for the crypto industry.
