Ethereum ETFs Attract Investments Amid Market Downturn

Newly introduced Ethereum ETFs saw positive inflows on a day when many risk-on assets, including cryptocurrencies, experienced significant declines. Despite a more than 25% drop in ether, the cryptocurrency that these Ethereum funds mirror, on Monday, it has since rebounded to approximately $2,500, marking a 4.5% increase from the previous day.

According to data from CoinMarketCap, Ethereum ETFs attracted $48.8 million in inflows, as reported by U.K. asset manager Farside Investors. BlackRock’s iShares Ethereum Trust (ETHA) led the pack with $47.1 million in inflows, followed by the VanEck Ethereum ETF (ETHV) and Fidelity Ethereum Fund (FETH), each receiving around $16 million. The Grayscale Ethereum Mini Trust (ETH) also saw inflows of $7.6 million.

These nine Ethereum ETFs were launched on July 23, making them the second set of funds based on the real-time price of a major cryptocurrency. This follows the debut of Spot Bitcoin ETFs on January 11 after years of resistance from the Securities and Exchange Commission (SEC) towards such products.

Ether, with a market capitalization of approximately $300 billion, is the second-largest cryptocurrency, trailing behind Bitcoin, which boasts a market cap exceeding $1.1 trillion, according to CoinMarketCap.

On the flip side, the Grayscale Ethereum Trust (ETHE) experienced outflows of $46.8 million, making it the sole product to observe negative flows on Monday. Notably, this trust differs from other Ethereum funds as it is a conversion from an existing trust and carries the highest expense ratio at 2.5%.

Despite the outflows, Ethereum ETFs have collectively recorded net outflows of $462.4 million within their first two weeks of trading, primarily driven by ETHE’s outflows exceeding $2.1 billion, surpassing inflows to other Ethereum funds. Nevertheless, the launch of these funds has been deemed largely successful.

The market downturn, spurred by concerns over a potential U.S. recession and other macroeconomic uncertainties, led to a broad decline in major indices and sectors on Monday. The S&P 500 and Nasdaq, heavily weighted towards tech, dropped by 3% and 3.4%, respectively.

In contrast, Spot Bitcoin ETFs experienced net outflows of $168.4 million on Monday, with Grayscale Bitcoin Trust ETF (GBTC) and ARK 21Shares Bitcoin ETF (ARKB) leading the outflows, shedding around $69 million each. Since their inception, the 11 spot bitcoin funds have collectively generated approximately $17.3 billion in net inflows.