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U.S. spot-traded Ethereum (ETH) exchange-traded funds (ETFs) recorded $476 million in negative net flows in the first month of trading, failing to overcome outflows resulting from Grayscale’s ETHE unlocking.
Eric Balchunas, senior ETF analyst at Bloomberg, hailed the “heroic” performance of the Newborn Nine Spot Bitcoin (BTC) ETF, which saw enough inflows to far eclipse the massive outflows seen by GBTC.
This performance stands in stark contrast to the $5 billion inflows recorded by Bitcoin ETFs during a similar period after their launch.
Analysts have attributed this disparity to several factors, including Bitcoin’s “first-mover advantage,” the lack of staking options in Ethereum ETFs, and lower liquidity in the Ethereum market, making these ETFs less attractive to institutional investors.
Despite these challenges, some Ethereum ETFs showed signs of recovery towards the end of the month. Balchunas added that outflows won’t continue forever and that inflows from newly launched ETFs will eventually catch up with outflows. He said:
“But the good news is that the unlocking will end, there is light at the end of the tunnel.”
More than $2 billion in revenues
Grayscale’s ETHE lost nearly $2.6 billion in its first month, according to data from Farside Investors. The move was expected, as the same thing happened with its GBTC Bitcoin fund.
Although inflows from other Ether ETFs were not enough to ensure a positive monthly net flow, the amount of liquidity directed into these crypto products was nonetheless significant.
BlackRock’s ETHA has surpassed $1 billion in inflows, making it the seventh-largest ETF by year-to-date flows, according to a shared list.
Fidelity’s FETH also saw significant inflows of around $393 million, making it the 19th largest ETF in terms of year-to-date inflows, while Bitwise’s ETHW is the third and final US-traded Ethereum ETF that managed to capture over $300 million in inflows in its first year.
Moreover, despite Grayscale’s massive ETHE outflows, its Ethereum mini trust, ETH, managed to capture nearly $240 million in admissions.
If all inflows to U.S.-traded Ethereum ETFs were consolidated into a single product, it would be the fourth-largest exchange-traded fund by 2024.
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