Ethereum ETFs Debut Strongly: BlackRock and Bitwise Lead with $470.5M Combined Inflows

The launch of Ethereum spot exchange-traded funds (ETFs) has marked a significant milestone in the cryptocurrency market. On their first day of trading, these ETFs saw over $1 billion in volume and attracted $106.78 million in net inflows, according to data from SoSoValue. 

BlackRock and Bitwise emerged as the top performers among the new Ethereum ETFs. BlackRock's iShares Ethereum ETF (ETHA) led the pack with $266.5 million in net inflows, while Bitwise's Ethereum ETF (ETHW) followed closely with $204 million. Fidelity’s Ethereum Fund (FETH) came in third, attracting $71.3 million. 

The launch of the new ETFs also had a notable impact on the Grayscale Ethereum Trust (ETHE), which experienced significant outflows. ETHE saw $484.9 million, or 5% of its total assets, flow out on the first day of ETF trading. 

This is largely due to the conversion of the trust into a spot ETF, allowing investors to sell their shares more easily. ETHE was the most traded fund on the first day, with nearly $458 million in volume, accounting for almost half of the overall trading volume.

Trading Volume Breakdown

The overall trading volume for the newly launched Ethereum ETFs reached $1.11 billion on the first day. 

BlackRock’s ETHA saw $243 million in trading volume, reflecting strong investor interest. Other funds, such as Fidelity's FETH and Bitwise’s ETHW, also saw substantial activity, although six of the funds had volumes below $100 million. 21Shares’ Core Ethereum ETF (ETHC) had the least traction among the new offerings.

The trading volume for the Ethereum ETFs was about 20% of the volume that spot Bitcoin ETFs experienced on their launch day in January. Analysts had predicted that demand for Ethereum ETFs would be lower than for Bitcoin ETFs due to several factors. These include Ethereum's lower name recognition and the inability to stake the cryptocurrency when buying shares of the funds.

Market Analysis and Predictions

Analysts have provided various predictions regarding the inflows for the new Ethereum ETFs. Ryan Lee, chief analyst at Bitget Research, expects the ETFs to quickly capture around 2.5% of Ethereum's market cap, equating to approximately $10.6 billion. 

Bloomberg ETF analysts Eric Balchunas and James Seyffart estimate that the funds will amass between $5 billion and $6 billion in their first year.

Despite the strong start, there are challenges ahead for the new Ethereum ETFs. The current funding rate for Ethereum, which is significantly lower than Bitcoin’s, could deter institutional investors from using the funds for arbitrage investments, as per a recent CoinDesk report. 

Markus Thielen, founder of 10x Research, noted that Ethereum’s funding rate is between 7% and 9%, compared to Bitcoin’s 70% during its ETF launch period.