New U.S. Spot Ethereum ETFs Launched Last Week, Attracting Significant Attention and Capital

Eight funds saw notable inflows totaling over $1 billion, while Grayscale's ETHE experienced $1.5 billion in net outflows.

The much-anticipated U.S. spot Ethereum ETFs finally hit the market last week, generating massive capital inflows and outflows. Here's a closer look at the performance, comparing it to Bitcoin ETFs and analyzing the impact on Grayscale's ETHE.

New Spot Ether ETFs Saw Inflows, While Grayscale's ETHE Experienced Outflows

On Tuesday, eight issuers launched nine spot Ether ETFs, following the SEC's approval in May. These funds were highly awaited by investors and traders alike.

BlackRock's ETHA led the pack with $442 million in net inflows over the first four days. Bitwise's ETHW came in second with $265.9 million, and Fidelity's FETH generated $219.4 million. Other notable funds included VanEck's ETHV with $35.4 million, Franklin Templeton's EZET at $23.3 million, Invesco's QETH with $14.2 million, and 21Shares' CETH with $7.5 million.

Meanwhile, Grayscale's ETHE saw net outflows exceeding $1.5 billion, contributing to a total net outflow of $341.8 million for all U.S. spot Ethereum ETFs. This outflow overshadowed the positive performance of the other funds.

Comparing Ethereum ETFs to Bitcoin ETFs

While the first-week performance of Ethereum ETFs was strong, it fell short when compared to the Bitcoin ETFs that were launched in January. The Bitcoin ETFs generated a total net inflow of $1.26 billion in their first four days.

Excluding ETHE, the new Ethereum ETFs brought in 40% of the net inflows that Bitcoin ETFs did, with $1.17 billion compared to $2.89 billion.

“Ex-ETHE, we had well over $1 billion come into spot ETH ETFs this week,” said Nate Geraci, President of The ETF Store. “A portion of that was recycled from ETHE, but nowhere close to the primary driver.”

He went on to highlight the substantial investor interest in ether via traditional financial products.

Grayscale's ETHE Had a Dramatic Impact, Despite Higher Fees

Grayscale's ETHE had a significant impact on the market, given its large size. Initially launched as a private placement in 2017, ETHE began public trading on OTC Markets in mid-2019 before being uplisted to NYSE Arca last week.

ETHE charges a higher fee of 2.5%, compared to the 0.19% to 0.25% post-waiver fees of other spot Ethereum ETFs. Grayscale also launched the Mini Trust ETH ETF with a lower fee of 0.15%.

From its $10 billion in assets (2.9 million ether) before the conversion, $9.2 billion went to ETHE, and over $1 billion to ETH. Despite inflows of $164 million to ETH, ETHE's substantial outflows reduced its assets under management to about $7.5 billion (2.28 million ether).

Strong Trading Volume for Ethereum ETFs in First Week

In their first week, the spot Ethereum ETFs generated $4.05 billion in trading volume, which is 34% of the $11.82 billion volume from the Bitcoin ETFs' launch.

ETHE dominated with a 52% market share, followed by BlackRock's ETHA (21.7%), Grayscale's ETH (12%), and Fidelity's FETH (8.4%).

The Bitcoin ETFs saw lower volumes last week, recording $7.35 billion. The Ethereum ETFs outpaced analysts' expectations, achieving 55% of the Bitcoin ETFs' volume for the same period.

Global Perspective and Future Outlook

Globally, digital asset investment products had $245 million in net inflows last week. Bitcoin investment products led with $519 million, bringing July's total to $3.9 billion. According to CoinShares Head of Research James Butterfill,

“The U.S. electioneering comments around bitcoin as a potential strategic reserve asset, and the increased chances for a September 2024 FED rate cut are the likely reason for renewed investor confidence.”

The launch of U.S. spot Ethereum ETFs saw significant inflows, with newly issued ETFs receiving $2.2 billion. However, considering ETHE's net outflows, Ethereum-based investment products saw a total net outflow of $285 million globally. Crypto investment products now manage $99.1 billion in assets, with a record-breaking $20.5 billion in net inflows year-to-date.

Ether is trading at $3,371.55, up 3.24% in the last 2

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