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Key Takeaways
- Spot ether ETFs began trading in the U.S. today, with these funds starting with a collective assets under management of over $10 billion.
- Analysts expect the launch of spot ether ETFs to be a net negative on the underlying ether price over the short term due to expected outflows from the preexisting Grayscale Ethereum Trust.
- The spot bitcoin ETFs are still experiencing strong inflows, with BlackRock’s IBIT alone seeing more than $500 million in inflows on Monday.
- Spot bitcoin and ether ETF issuer Franklin Templeton has invested in a project that intends to bring Ethereum’s technology to Bitcoin.
Nine spot ether exchange-traded funds (ETFs) began trading on the stock exchanges Tuesday, but all the optimism ahead of their approval didn’t translate into gains for the crypto markets.
Ether (ETH), the native cryptocurrency of the ethereum blockchain, traded down less than 1% around the $3,400 level as of 1:30 p.m. ET, while bitcoin (BTC) slipped more than 2% to around $66,000.
Ether ETFs’ Debut Not As Flashy As Bitcoin ETFs’
Spot ether ETFs began trading with just over $10 billion worth of assets under management (AUM), according to Bloomberg Intelligence analyst James Seyffart, with most of that money in the existing Grayscale Ethereum Trust (ETHE) that was converted into an ETF today.
“Long term Grayscale will simultaneously have the highest fee and lowest fee on the market. The asset manager’s decision to keep its ETHE fee at 2.5% could lead to outflows from the fund,” said Kaiko Research in a note Monday.
Outflows from ETHE, should they occur, would be similar to the ones faced by Grayscale’s Bitcoin Trust (GBTC) after spot bitcoin ETFs began trading in January this year, most likely on account of the high fees for the two original funds. Grayscale’s existing fund charges 2.5% fees, while a new “mini” ether ETF will charge 0.15% and fees for other ETFs are pegged at 0.25% or lower.
Those outflows could drag on ether’s price and market sentiment.
“There could be a pushback a little while after the launch of Ethereum spot ETFs, that is outflows from the Grayscale Ether Trust may dampen market sentiment in the short while,” Hashkey Capital Liquid Fund Partner Jupiter Zheng told The Block.
But Grayscale remains optimistic.
“Relative to the splashy debut of spot Bitcoin ETPs in January, the launch of Ethereum ETPs has been comparatively low key,” said Grayscale Head of Research Zach Pandl, adding that investors may be “under-appreciating” the ether ETFs that “are coming to the US market in tandem with a shift in US politics around crypto and as major financial institutions embrace tokenization.”
Strong Bitcoin ETF Inflows Continue
On the bitcoin side of things, there is clearly no lack of demand for the spot ETFs, as BlackRock’s iShares Bitcoin Trust (IBIT) enjoyed its sixth-largest day of inflows in its short history on Monday at $526.7 million, according to data from Farside Investors. Daily inflows for the overall spot bitcoin ETF market were also at their highest level since June 5.
Notably, asset manager Franklin Templeton, which has issued both bitcoin and ether ETFs, has appeared to hedge its bets when it comes to Ethereum by investing in Bitlayer, which is a way of implementing Ethereum’s technology on a second-layer Bitcoin network, according to CoinDesk.