Ethereum ETFs Experience $341.8m in Net Outflows in Debut Week, Prompted by Grayscale’s ETHE

U.S. Ethereum exchange-traded funds (ETFs) in the spot market had a varied start this week, witnessing net inflows into most ETFs but also notable net outflows from Grayscale’s converted fund, ETHE.

According to data from Farside Investors, spot Ethereum (ETH) ETFs experienced total outflows of over $162 million on Friday, July 26, marking the third consecutive day of negative flows. In contrast, spot Bitcoin (BTC) ETFs recorded $51.8 million in net inflows on the same day, continuing a trend of positive flows for three consecutive days.

The debut of the first-ever spot Ethereum ETFs in the U.S. occurred on Tuesday, July 23, with nine products from eight issuers commencing trading following their approval by the Securities and Exchange Commission in May.

In the initial week of trading, most newly launched Ethereum ETFs observed positive inflows, except for Grayscale’s ETHE, which saw $1.51 billion in net outflows. This resulted in an overall weekly outflow of $341.8 million for the ETFs.

Among these, BlackRock’s ETHA led with $442 million in net inflows, followed by Bitwise’s ETHW with $265.9 million and Fidelity’s FETH with $219.4 million. VanEck’s ETHV and Franklin Templeton’s EZET saw smaller inflows of $35.4 million and $23.3 million, respectively. 21Shares’s CETH received an inflow of $7.5 million on its launch day but experienced zero inflows in the following three trading days.

Grayscale introduced two spot Ethereum funds, ETHE and ETH, to the markets last week. ETHE, initially launched in 2017 as a private placement, transitioned to a spot Ethereum ETF, allowing investors more flexibility in selling their holdings. The 2.5% management fee for ETHE, relatively high compared to other ETF issuers, led investors to shift to products with lower fees, prompting outflows from Grayscale’s fund.

Grayscale also launched the Ethereum Mini Trust (ETH) with a competitive fee of 0.15%, resulting in inflows every trading day last week totaling $164 million. ETHE’s outflows, combined with over a 6% decline in Ethereum’s price since the ETFs’ launch, reduced Grayscale Ethereum Trust’s assets under management to approximately $7.46 billion.

Comparing Ethereum ETFs to Bitcoin ETFs in their first week, Ethereum saw total net inflows of $106.7 million on the launch day, with a trading volume of around $1.1 billion. Throughout the week, Ethereum ETFs generated a total trading volume of approximately $4.05 billion.

Analysts predict that Ethereum ETFs could attract inflows ranging from 6% to 48% of those seen by Bitcoin ETFs in the first six months, potentially reaching between $1 trillion and $7.5 trillion in total inflows by late January 2025.

As of the latest data, ETH, the second-largest cryptocurrency, was trading at $3,280 with a market cap of around $393 billion and a 24-hour trading volume of nearly $14.4 billion.