Ethereum ETF To Follow Bitcoin Path, Attract Up to $10B in Assets Under Management Within First Year

The launch of spot Ethereum exchange-traded funds (ETFs) on July 23 sparked significant market interest, with initial inflows exceeding $100 million.

The launch of spot Ethereum exchange-traded funds (ETFs) on July 23 sparked significant market interest, with initial inflows exceeding $100 million. This marked a notable shift from the previous four days of outflows for U.S. spot Ether ETFs, which saw a total of $33.67 million in new investments.

However, this figure was partly offset by a $120.28 million outflow from Grayscale's Ethereum Trust (ETHE). Several crypto analysts have expressed optimism about the future performance of Ethereum ETFs.

Among them, Katalin Tischhauser, Head of Investment Research at Sygnum Bank and a former Goldman Sachs executive, predicted that spot Ether exchange-traded funds could attract up to $10 billion in assets under management (AUM) within their first year. She also forecasted that Bitcoin ETFs could see inflows ranging from $30 billion to $50 billion in their initial 12 months, with Ethereum products likely following suit.

According to Tischhauser, Ethereum investments offer distinct advantages over Bitcoin. While Bitcoin is largely viewed as a store of value, Ethereum's value is primarily derived from revenues and cash flows. This characteristic makes Ether more relatable for traditional institutional investors compared to Bitcoin's perception as “digital gold.”

To further entice institutional investors, several ETF issuers are waiving fees for their spot Ethereum funds. Among them, Franklin Templeton has announced a 0.19% sponsor fee but will waive it for the first $10 billion in assets for six months. Additionally, both Bitwise and VanEck will charge a 0.20% fee until some point in 2025.

Meanwhile, BlackRock has revised its registration statement for its spot Ethereum ETF, ETHA, to include a 0.25% management fee. Grayscale, on the other hand, has launched its Grayscale Ethereum Mini Trust with the same 0.25% fee.

Despite the enthusiasm surrounding these ETFs, it's important to note that they do not include any provisions for staking rewards. In May, BlackRock, Grayscale, and Bitwise all removed staking provisions from their SEC applications following discussions with the regulatory body.

This exclusion is particularly relevant for institutional investors who are unable to directly stake their crypto holdings due to regulations and legal constraints. As a result, they can only gain exposure to staking yields through ETFs, which are currently limited in this regard.

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