ETH Trades Flat Despite Spot Ethereum ETFs Going Live

On July 23, nine spot Ethereum exchange-traded funds (ETFs) began trading after a rollercoaster multi-month build-up.

The milestone comes after BlackRock, Franklin Templeton, Fidelity, VanEck, Bitwise, 21Shares, and Invesco all received final approval of their S-1 registration statements yesterday. Grayscale’s bids to convert its Ethereum Trust into an ETF and launch the Grayscale Ethereum Mini Trust were also greenlit today.

James Seyffart, an ETF analyst at Bloomberg, noted that the sector debuted with assets under management of $10.25 billion, 90% of which is held in the Grayscale Ethereum Trust.

“The launch of a spot Ethereum ETF in the United States marks a crucial development, highlighting the advancing maturity of the cryptocurrency asset class and its relevance in both retail and institutional portfolio management,” said Cristiano Ventricelli, the vice president of digital economy at Moody’s Ratings.

“The approval of spot crypto ETFs signals another pivotal moment in the global transition toward digital assets,” said Brett Tejpaul, Head of Coinbase Institutional. “This wave of interest is not just a trend; it’s a transformative force, reshaping the financial system and solidifying crypto’s lasting presence in the financial landscape.”

The debut of spot Ether ETFs comes more than after spot Bitcoin ETFs became the fastest-growing ETF asset class since launching nine months ago.

“The spot bitcoin ETFs have already become the fastest-growing ETFs of all time, with $17 billion of net inflows since approval earlier this year,” Tejpaul continues. “The approval of ETH ETFs continues this momentum and gives investors yet another way to invest in the increasingly mainstream crypto economy.”

ETH trends sideways on ETF launch

The launch has defied expectations that the funds entering the market would trigger a sell-on-the-news event for ETH so far. Ether’s price is up 0.1% over the past 24 hours, last changing hands for $3,695, according to The Defiant’s crypto price feeds.

ETH also gained 1.7% against BTC over the past day at 0.0525 BTC, and is up 17% since bottoming out at 0.045 BTC in mid-May.

Matt Hougan, the CIO of Bitwise, an Ether ETF issuer, noted that pre-market trade volume for Ethereum exchange-traded products (ETPs) was “significantly lighter than pre-market trading of BTC ETPs” on the day of their launch. “Still, good to see trading activity in the biggest expected players pre-market,” he added.

Philipp Pieper, the co-founder of Swarm Markets said he expects an underwhelming initial market response to the funds launching.

“For an indication of what this will do in the short term, we can look to the experience of the bitcoin ETF earlier in the year,” Pieper said. “On this basis, we’d imagine the reaction to the market will be muted initially, even with some selling pressure.”

However, Pieper anticipates a “major capital reallocation” into ETH over the medium term, likely driving upward price pressure for Ethereum.

Wintermute, a digital asset trading firm, predicts annualized inflows of between $3.2 billion and $4 billion, which could drive ETH price gains from 18% to 24% by 2025.

Inflow estimates

Analysts offer wide-ranging estimates regarding the volume of capital expected to flow into Ether ETFs.

Ryan Lee, the chief analyst of Bitget Research, told The Defiant that spot Ether ETFs will quickly capture around 2.5% of Ethereum’s market cap — equating to roughly $10.6 billion.

Bloomberg ETF analysts Eric Balchunas and James Seyffart estimate that spot Ether funds will amass between $5 billion and $6 billion in their first year, equating to 20% of the inflows to Bitcoin ETFs. Galaxy Digital similarly predicts that $5 billion will enter the sector over five months.

Others anticipate the funds will generate slower growth, with Steven McClurg, head of U.S. asset management at CoinShares, tipping that spot Ether ETFs will host just 10% of the inflows to Bitcoin funds.

Danny Chong, the co-founder of Tranchess, suggested that smaller inflows to Ether ETFs could have a greater effect on the Ethereum market given its smaller capitalization relative to Bitcoin.

The Spot ETF inflows could have a bigger impact on Ether than Bitcoin due to Ethereum’s rapidly expanding ecosystem,” Chong said. “The Ether/BTC price ratio has already seen positive movement.”

However, Chong also acknowledged that Hong Kong-based Ether ETFs were “slow to live up to the industry’s expectations” upon launching earlier this year.

ETF fees

All but two of the funds are offering temporary fee rebates on trades lasting between roughly six and 12 months. Every fund debuted with zero fees except for BlackRock’s iShares Ethereum Trust, the Invesco Galaxy Ethereum ETM, and Grayscale’s Ethereum Trust (ETHE), which charge fees of 0.12%, 0.25%, and 2.5% respectively, according to James Seyffart, an ETF analyst at Bloomberg.

Once the waivers have expired, the funds will charge fees ranging from 0.19% to 0.25%, except for ETHE and the Grayscale Mini Ethereum Trust, which will charge 0.15% and 2.5%.

On July 22, Bitwise announced it will donate 10% of its profits generated by the Bitwise Ethereum ETF between Protocol Guild, an organization supporting Ethereum core developers, and PBS Foundation, a non-profit that funds open-source block relays and associated research.

The move follows VanEck pledging 10% of the profits from its ETF to Protocol Guild for the first 10 years of the fund’s operation.