The spot Ethereum ETFs' first week by the numbers

The U.S. spot Ethereum ETH +3.52% exchange-traded funds got off to a contrasting start last week, with net inflows into most ETFs overwhelmed by net outflows from Grayscale’s converted fund, ETHE.

Nine new spot Ethereum ETFs from eight issuers launched last Tuesday after initially gaining approval from the Securities and Exchange Commission in May.

In the first four days of trading, BlackRock's ETHA led the pack, generating $442 million worth of net inflows, followed by Bitwise’s ETHW with $265.9 million and Fidelity’s FETH with $219.4 million. VanEck’s ETHV, Franklin Templeton’s EZET, Invesco’s QETH and 21Shares’ CETH also generated $35.4 million, $23.3 million, $14.2 million and $7.5 million worth of net inflows, respectively.

In fact, almost all of the ETFs have generated inflows, with the exception of Grayscale’s ETHE, witnessing over $1.5 billion in net outflows last week alone, leading to a total net outflow of $341.8 million for the combined U.S. spot Ethereum ETFs.

That compares to a first four-day total net inflow of $1.26 billion for the U.S. spot Bitcoin BTC +2.70% ETFs which launched in January. However, excluding ETHE, the Ethereum ETFs generated around 40% of the net inflows witnessed by the Bitcoin ETFs after their launch in January, excluding the similarly converted GBTC, at $1.17 billion compared to $2.89 billion.

“Ex-ETHE, well over $1 billion came into spot Ethereum ETFs this week. A portion was clearly recycled from ETHE, but nowhere close to the primary driver IMO,” The ETF Store President Nate Geraci said on Friday. “Think highly successful debut. Another way to think of this is investors wanted $1 billion+ ether exposure via tradfi rails. In *4* days,” he added.

The spot Bitcoin ETFs generated a total net inflow of $49.4 million during the same four days last week, led by BlackRock’s IBIT with $231.8 million worth of inflows, though Valkyrie’s BRRR data from Friday trading is still pending at the time of writing. The Bitcoin ETFs' figures fell considerably following the Ethereum ETFs' launch, having posted $485.9 million of net inflows last Monday.

The overwhelming impact of Grayscale’s ETHE

The Grayscale Ethereum Trust first launched as a private placement in 2017. In mid-2019, its shares began trading publicly on OTC Markets under the ticker ETHE. This continued until July 23, when ETHE was uplisted to NYSE Arca as one of the newly-approved spot Ethereum ETFs.

ETHE also has a much higher fee , charging 2.5% compared to the 0.19% to 0.25% post-waiver fees of the other issuers’ spot Ethereum ETFs. However, in a two-pronged strategy from the incumbent Grayscale, its additional Grayscale Mini Trust Ethereum ETF product (ETH) charges the lowest fee of all at just 0.15%.

From the roughly $10 billion worth of assets (2.9 million ether) the Grayscale Ethereum Trust held prior to conversion, $9.2 billion worth of seed funding was allocated to ETHE and just over $1 billion to its ETH fund. 

Grayscale's ETH Mini Trust also witnessed net inflows last week, totaling $164 million. However, ETHE’s substantial outflows, combined with a drop in ether’s price since the ETFs launched, have seen its assets under management fall to around $7.5 billion (2.28 million ether), according to its fund page .

It’s early days of course, and if Grayscale’s converted spot Bitcoin ETF, GBTC, is anything to go by, the net outflows are likely to slow down. However, at a current average net outflow of around $378 million per trading day, ETHE’s assets could be exhausted within weeks.

“The major difference to me is the comparatively massive ETHE outflow. I think GBTC didn't have that on day one because it was still at a meaningful discount when it launched,” Bloomberg ETF analyst James Seyffart said , comparing the outflows of the two products.

“The 'new eight' Ethereum ETFs not quite as strong as the 'new nine' Bitcoin ETFs in offsetting Grayscale outflows but good news is their inflows/volume is still very healthy, and the intensity of the ETHE unlock will die down sooner than it did with GBTC = outlook good but next few days could be tough,” fellow Bloomberg ETF analyst Eric Balchunas added .

Ethereum ETF trading volume vs. Bitcoin ETFs

The spot Ethereum ETFs generated a cumulative $4.05 billion in trading volume in their first week, accounting for 34% of the $11.82 billion volume recorded by the spot Bitcoin ETFs during their first four days post-launch.

Spot Ethereum ETF trading volumes were dominated by Grayscale’s ETHE, with around a 52% market share on Friday, followed by BlackRock’s ETHA, Grayscale’s ETH and Fidelity’s FETH, with 21.7%, 12% and 8.4% volume shares, respectively.

While trading volume for the Bitcoin ETFs is now at lower levels since their launch, the Ethereum ETFs generated 55% of the $7.35 billion trading volume for the Bitcoin ETFs over the same period last week.

Again, it’s early days, and the Ethereum ETFs may also experience a slowdown following the initial launch. However, inflows, excluding ETHE and GBTC, and trading volume represented a higher proportion of the Bitcoin ETFs figures than most analysts’ expectations of 15-25%.

The spot Ethereum ETFs also quickly eclipsed the trading volume of existing Ethereum futures ETF products, accounting for a 99.3% market share by Friday, according to The Block’s data dashboard .

In contrast, the spot Bitcoin ETFs account for around 92.75% of trading volume market share compared to Bitcoin futures ETFs.

Muted global picture

The picture was more muted globally amid the U.S. spot Ethereum ETFs launch, with digital asset investment products witnessing just $245 million in net inflows worldwide, according to asset manager CoinShares’ latest report .

Weekly crypto asset flows. Images: CoinShares .

Global Bitcoin investment products generated $519 million in net inflows last week, bringing July inflows to $3.9 billion. “We believe the U.S. electioneering comments around bitcoin as a potential strategic reserve asset , and the increased chances for a September 2024 FED rate cut are the likely reason for renewed investor confidence,” CoinShares Head of Research James Butterfill wrote.

Trading volumes also rose to the highest levels since May at $14.8 billion last week, Butterfill added, boosted by the new spot Ethereum ETFs in the U.S.

“The launch of the U.S. spot Ethereum ETFs saw some of the largest inflows since December 2020, with newly issued ETFs seeing $2.2 billion inflows, while trading volumes in ETH ETPs rose by 542%,” Butterfill said. However, that figure includes around $1 billion in seed funding for the Grayscale Mini Trust ETF (ETH), and when combined with net outflows of $1.5 billion from Grayscale’s converted ETHE product, Ethereum-based investment products saw a total of $285 million in net outflows globally last week.

Crypto investment products now account for total assets under management of $99.1 billion globally, with a record-breaking $20.5 billion in net inflows year-to-date, Butterfill noted.

Ether is currently trading for $3,389, according to The Block’s Ethereum price page , up 4.3% during the last 24 hours but down 3% over the past week.

ETH/USD price chart. Image: The Block/TradingView .