Markets
BlackRock leads as ether ETFs raise $100 million on first day of US trading
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BlackRock, Bitwise Investments and Fidelity have become the first leaders among U.S. exchange-traded funds that invest directly in ether, the world’s second-largest cryptocurrency.
The funds took in about $267 million, $204 million and $71 million, respectively, on their first day of trading Tuesday, while investors pulled about $484 million from a better-established but more expensive rival, Grayscale Investments, according to Bloomberg Intelligence data.
The nine new ETFs investing in the native token of the Ethereum blockchain have raised approximately $108 million, generating approximately $1.1 billion in aggregate volume.
The exchange-traded funds received final approval from the Securities and Exchange Commission earlier this week, giving the cryptocurrency market a firmer footing traditional funding following the launch in January of the first bitcoin spot ETFs.
But the inflows for ether ETFs are far lower than the volume and flows for bitcoin ETFs, which brought in about $655 million on nearly $4.7 billion in aggregate trading volume, during the first day.
Traders and executives said Ethereum was unlikely to match Bitcoin’s spectacular performance because it was not as well-known and had a different function and investment narrative than Bitcoin.
Bitcoin’s market capitalization of $1.3 trillion is much larger than Ether’s $412 billion, while Ethereum is widely used as a platform for creating new cryptocurrency projects.
Ethereum’s native token, Ether, can also be used to generate yield for the holder when staked or locked, in order to secure and validate transactions on the Ethereum network.
However, the regulator has yet to clarify whether the activity qualifies as a security and has banned new ETF issuers from participating in staking.
“Given the larger-than-expected outflows from the Grayscale Ethereum Trust, these inflows are in line with the consensus expectation of ~20% of Bitcoin ETF assets under management being spot,” CCData, a data provider, said Wednesday.
Grayscale, which turned its Ethereum Trust into an ETF, has kept its management fee at 2.5%, well above its competitors. It also launched a cheaper “mini” ether ETF that has raised about $15 million, according to Bloomberg data.
The launch of the Ether ETF follows a abrupt initial approval in May by the SEC. Grayscale’s research director Zach Pandl suggested that investors “may be underestimating the significance of this milestone for the current market cycle and for the crypto industry over the long term.”
Projections compiled by CCData indicate that analysts and research groups conservatively expect ether ETFs to accumulate just over $3.5 billion collectively over the next six months, with forecasts ranging from $7.5 billion to $1 billion.
Bitcoin ETFs have amassed more than $17 billion in new money in total since their debut in January, led by BlackRock’s iShares Bitcoin Trust, which now has about $22 billion in assets.
Bitcoin and ether prices have increased by about 50% and 45% respectively since the start of 2024.