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Ether Spot ETF Flows Have Underwhelmed Versus Bitcoin: JPMorgan

Aug 27, 2024
  • Ether spot ETFs have seen net outflows overall since their launch, said the team at JPMorgan.
  • The outflows from the Grayscale Ethereum Trust were much larger than the bank had originally anticipated.
  • The bank noted growing interest from asset managers for a combined ETF that gives exposure to both bitcoin and ether.

As a seasoned analyst with over two decades of experience in the financial markets, I have witnessed numerous trends come and go. The recent launch of Ether spot ETFs has been particularly intriguing, given the stark contrast between their performance and that of their bitcoin counterparts.

Since their debut last month, exchange-traded funds based on ether have generally experienced a decrease in investments as compared to the thriving introduction of Bitcoin ETFs earlier this year, according to a research report by JPMorgan published on Wednesday.

ETFs based on Ether (ETH) began trading in the U.S. five months after Bitcoin (BTC) ETFs. In the first month following each launch, the Ether funds experienced approximately $500 million in net outflows, while Bitcoin ETFs recorded over $5 billion in net inflows, as reported by their banking team.

According to the bank, the relatively poor performance of the Ether Exchange-Traded Funds (ETFs) wasn’t entirely surprising, as it was predicted given Bitcoin’s initial market lead, its lack of staking opportunities, and its lower liquidity, which makes it less attractive for institutional investors.

Surprisingly, Grayscale’s Ethereum Trust (ETHE) experienced $2.5 billion in withdrawals, which JPMorgan had expected to be approximately $1 billion. This shift occurred as the fund converted from a closed-end fund to a spot ETF. Notably, JPMorgan mentioned that Grayscale introduced a smaller Ethereum exchange-traded fund (ETF) to offset the outflows from ETHE, but this new ETF has only attracted $200 million in investments so far.

“Because people are investing less in spot ether ETFs compared to Bitcoin, it seems that investment managers are showing more interest in filing for a single ETF that provides exposure to both Bitcoin and Ether,” as stated by the team headed by Nikolaos Panigirtzoglou.

As a crypto investor, I noticed that the distribution of ownership for spot Bitcoin ETFs remained relatively stable during the first quarter. Interestingly, it was reported that retail investors held approximately 80% of these ETFs. Furthermore, it seems that most of the newly launched spot Bitcoin ETFs were predominantly purchased by retail investors, either directly or indirectly through financial advisors.

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2024-08-28 16:58