Spot Ethereum ETFs $100M Debut: BlackRock Leads, Grayscale Bleeds

Spot Ethereum ETFs began trading in the United States for the first time on July 23, and the initial picture isn’t pretty for the world’s largest crypto asset manager.

As expected, Grayscale’s newly converted Ethereum Trust (ETHE) hemorrhaged $484 million on day one of trading.

If the situation mirrors that when Grayscale converted its Bitcoin Trust to a spot ETF, the fund could lose half of its assets under management. This would equate to around $4.5 billion worth of Ethereum.

Solid First Day

Investors are pulling out of the fund because they can now realize profits on the large premium gap that it had before becoming spot-based.

Additionally, there may be some reallocation to funds that have more favorable fees since ETHE has a hefty 2.5% fee which is much higher than the seven competing funds.

To counter this, Grayscale launched an Ethereum Mini Trust (ETH) with a $1 billion AUM starter and a 0.15% fee. This fund had an inflow of $15 million on its first day of trading, according to preliminary data from Farside Investors.

Nevertheless, the overall picture wasn’t too bad, with an inflow of $106 million for the nine ETF providers combined. Bloomberg ETF analyst James Seyffart described it as a “very solid first day” in a post on X on July 24.

BlackRock’s ETHA fund led the pack with $266.5 million in inflows, and the Bitwise ETHW spot ETF had a good first-day trading with $204 million in inflows.

Meanwhile, the Fidelity FETH fund saw $71 million. There were minor inflows of between $7.5 million and $13 million for 21 Shares, Invesco, VanEck, and Franklin on day one.

UPDATE: First full day of flows for the ETHness stakes are in. The Ethereum ETFs took in $107 million. @BlackRock‘s $ETHA lead the way with $266.5 million followed by @BitwiseInvest‘s $ETHW with $204 million. Very solid first day pic.twitter.com/j28vIwVWvR

— James Seyffart (@JSeyff) July 24, 2024

Seyffart confirmed that the funds were not permitted to stake the ETH as cold storage was the only option due to regulatory restrictions.

ETH Price Reaction

There was no reactionary pump on Ethereum markets when the spot ETFs launched, as expected. The asset hit an intraday high of $3,534 on Tuesday before retreating to a low of just over $3,400.

However, Ethereum had recovered slightly to trade at $3,430 during the Wednesday morning Asian trading session.

Analysts have predicted that ETH prices may retreat back below $3,000 after the ETFs begin trading, but it will hit a new all-time high in the long term as institutional investors load up via this newly accessible trading vehicle.