Ether ETF Inflows Trail Behind Bitcoin, JPMorgan Reports

Ether spot exchange-traded funds (ETFs) have experienced net outflows since their recent launch, contrasting with the more successful introduction of spot bitcoin ETFs earlier in the year, as outlined in a research report by JPMorgan. The team at JPMorgan highlighted that the Grayscale Ethereum Trust witnessed significantly larger outflows than initially expected.

The U.S. debut of the ether (ETH) ETFs occurred on July 23, approximately six months following the introduction of bitcoin (BTC) funds. In the five weeks following each ETF launch, the ether funds encountered around $500 million in net outflows, while the bitcoin ETFs attracted over $5 billion in net inflows, according to JPMorgan’s analysis.

The lackluster performance of the ether ETFs was somewhat anticipated by the bank, attributing it to bitcoin’s “first mover advantage,” absence of staking, and lower liquidity, which diminishes its appeal to institutional investors. Surprisingly, there were $2.5 billion in outflows from Grayscale’s Ethereum Trust (ETHE), significantly surpassing the bank’s projected $1 billion outflows during its transition from a closed-end fund to a spot ETF. To counteract the outflows from ETHE, Grayscale introduced a mini ether ETF, which only attracted $200 million in inflows.

The JPMorgan team, led by Nikolaos Panigirtzoglou, noted a rising interest among asset managers in filing for a combined ETF that provides exposure to both bitcoin and ether due to the weaker demand for spot ether ETFs compared to bitcoin. The bank highlighted that institutional and retail ownership of spot bitcoin ETFs remained relatively stable from the first quarter, with retail investors holding approximately 80% of the assets. The majority of the new spot bitcoin ETFs were likely acquired by retail investors since their inception, either directly or indirectly through investment advisors.

In conclusion, although the ether ETFs have faced challenges in attracting investments, the evolving landscape indicates a potential shift towards combined ETFs that encompass both bitcoin and ether, reflecting the dynamic nature of the cryptocurrency market.

For further insights on this topic, you can refer to the article “Ether ETFs Have Bled Money, but That’s Not the Whole Story.”