Ether ETFs exceed $100M inflows in debut trading

Ether ETFs exceed $100M inflows in debut trading
BlackRock, Bitwise, Fidelity lead the demand across nine new funds.
JUL 24, 2024
By  Bloomberg

US exchange-traded funds investing directly in Ether achieved overall net inflows of $107 million on their first day of trading in launches that will provide a window onto mainstream crypto demand outside of Bitcoin.

BlackRock Inc.’s iShares Ethereum Trust posted the highest level of subscriptions on Tuesday, $267 million, followed by Bitwise Ethereum on $204 million and the Fidelity Ethereum Fund with $71 million, according to data compiled by Bloomberg.

Over $1 billion worth of shares traded across the nine ETFs, whose launch comes six months after US regulators permitted inaugural US spot-Bitcoin ETFs. The latter have attracted a net inflow of over $17 billion this year.

Ether is the No. 2 digital asset and popular for blockchain-based financial services but the token’s market value is still less than a third of Bitcoin’s, spurring expectations of smaller inflows compared with Bitcoin ETFs.

INVESTMENT NARRATIVE

The Bitcoin funds benefited from a controversial narrative that pitches the top token as digital gold, a spin that Ether lacks. The Ether funds also won’t offer so-called staking rewards for blockchain maintenance, a return that can be harnessed by owning the token directly.

“The flows are in line with our expectation,” said Vivien Wong, a partner at crypto investor HashKey Capital. She expects $3 billion to $5 billion of net inflows for the Ether portfolios over the next six months.

Eight new Ether funds listed on Tuesday while the more than six-year-old Grayscale Ethereum Trust — the largest for Ether with assets of $8.6 billion — converted from a closed-end structure into an ETF. The conversion smooths exits for arbitragers and the product saw a net outflow of $484 million.

There’s a risk such outflows could counteract the positive impact of new subscriptions, potentially exerting “downward” market pressure, Wong said.

TRAILING BITCOIN

Ether underperformed Bitcoin on Wednesday, dropping 1% as of 1:56 p.m. in Singapore compared with steady performance by the original cryptocurrency. Ether’s 85% climb during a digital-asset rebound over the past year trails a 125% jump in Bitcoin, which scaled a record high in March.

The US Ether ETFs posted “a very solid first day of trading,” said Bloomberg Intelligence ETF Analyst Rebecca Sin. She added that “the Ether market is much smaller than the Bitcoin market, so education is critical as we are only at the beginning of a long journey.”

The US Securities and Exchange Commission in May surprisingly pivoted toward approval of spot-Ether ETFs after grudgingly allowing Bitcoin funds in the wake of a court reversal in 2023. 

The agency cracked down on the digital-asset industry following the collapse of the FTX exchange but pro-crypto Donald Trump’s push to return to the White House had sparked speculation of a friendlier climate ahead. 

Latest News

Business-focused wealth tech RISR lands $8B Wealthcare Capital Management partnership
Business-focused wealth tech RISR lands $8B Wealthcare Capital Management partnership

Fintech platform interVal has also introduced a new feature to help advisors support entrepreneurial business owner clients better.

LPL boosts revenue potential with amped-up alts platform
LPL boosts revenue potential with amped-up alts platform

Along with greater revenue, alternative investments also carry risks, one industry lawyer noted.

How SageSpring Wealth Partners' next-gen strategy has fueled its success
How SageSpring Wealth Partners' next-gen strategy has fueled its success

President Jeff Dobyns unpacks the strategic power of mentorship, what makes an "ideal team player," and how the firm's 89 percent success rate has paid off for veteran advisors.

Powell heads for hot-seat hearings with ongoing pressure from Trump policies
Powell heads for hot-seat hearings with ongoing pressure from Trump policies

The Fed chair is in for some "hyper-charged" meetings, with legislators likely to raise questions on tariff threats and apparent steps to comply with anti-DEI orders.

Financial advisors react to the idea of 'parent money'
Financial advisors react to the idea of 'parent money'

A new article about baby boomers supporting their adult children has wealth managers buzzing.

SPONSORED Taylor Matthews on what's behind Farther's rapid growth

From 'no clients' to reshaping wealth management, Farther blends tech and trust to deliver family-office experience at scale.

SPONSORED Why wealth advisors should care about the future of federal tax policy

Blue Vault features expert strategies to harness for maximum client advantage.