As a seasoned crypto investor with years of experience under my belt, I’ve witnessed the evolution of Ethereum and its related investment vehicles with great interest. The recent launch of spot Ethereum ETFs in the United States was an exciting development that I closely followed, especially given the lessons learned from the conversion of Grayscale’s Bitcoin Trust to a spot ETF.
On July 23, Ethereum ETFs marked their debut in the US market for the first time. However, the opening scene hasn’t been favorable for the leading Ethereum fund manager.
Based on my expectations, I observed that Grayscale’s freshly launched Ethereum Trust (ETHE) experienced a significant loss of approximately $484 million during its inaugural trading day.
Should the circumstances resemble those when Grayscale transformed its Bitcoin Trust into a traditional ETF, approximately half of the Ethereum fund’s assets under management, amounting to around $4.5 billion, could be at risk.
Solid First Day
Investors are withdrawing their funds due to the opportunity to cash in on the significant price difference that previously existed between the fund and the spot market.
An alternative possibility exists for shifting investments towards funds with lower fees, as ETHE’s fee of 2.5% is substantially greater compared to the seven other options available.
In response, Grayscale initiated the Ethereum Mini Trust (ETH), boasting a $1 billion asset under management (AUM) foundation and a 0.15% fee. On its inaugural day of trading, this fund experienced an intake of approximately $15 million based on initial data from Farside Investors.
Despite the challenges, the collective intake for the nine ETF providers amounted to a robust $106 million on that particular day, as reported by Bloomberg ETF analyst James Seyffart in his post on July 24th. He characterized it as an impressive “first day” performance.
Amongst all the funds, BlackRock’s ETHA experienced the greatest inflow of investments totaling $266.5 million. The Bitwise ETHW spot ETF also saw significant success on its debut day, attracting $204 million in new investments.
As a crypto investor, I’d rephrase it as follows: On the first day, Fidelity’s FETH fund experienced an inflow of approximately $71 million. Meanwhile, 21 Shares, Invesco, VanEck, and Franklin saw minor inflows ranging between $7.5 million and $13 million each.
Based on my extensive experience in the cryptocurrency market and having closely followed the development of Ethereum-based ETFs, I must say that the first day’s flows for these funds have been quite impressive. The Ethereum ETFs collectively raised an impressive $311.5 million, with BlackRock’s iShares Ethereum and Bitwise Ethereum Trust leading the charge. BlackRock’s offering brought in a substantial $266.5 million, while Bitwise Ethereum Trust followed closely behind with $204 million. This is a strong start for these funds, and I believe it speaks to the growing demand for Ethereum exposure among institutional investors. The solid inflows on day one bode well for the future of these ETFs and the broader Ethereum ecosystem.
— James Seyffart (@JSeyff) July 24, 2024
Seyffart verified that it wasn’t allowed for the funds to hold ETH as cold storage was the mandatory choice owing to regulatory limitations.
ETH Price Reaction
As anticipated, there was no noticeable response from reactionary pumps in the Ethereum markets upon the launch of spot ETFs. On Tuesday, the asset peaked at an intraday high of $3,534 before dipping down to a low of slightly over $3,400.
Ethereum had regained some ground and was priced at around $3,430 during the Asian trading hours on Wednesday morning.
Experts anticipate that Ethereum (ETH) prices could dip under $3,000 again once the ETFs become active for trading. However, in the future, these investment vehicles will bring in more institutional investors, ultimately leading ETH to set a new record-high price.
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2024-07-24 08:38