NEW YORK, July 23, 2024 - On Tuesday, spot Ethereum exchange-traded funds (ETFs) made their debut, marking a historic moment for U.S. crypto investors. The launch of these funds drew significant attention from mainstream investors and Wall Street, highlighting Ethereum's growing prominence as the second-largest cryptocurrency by market cap.
Major financial institutions such as BlackRock, Fidelity, VanEck, Bitwise, and 21Shares introduced the new Ethereum ETFs, which collectively amassed over $1 billion in trading volume on their first day.
This launch follows the approval of spot Bitcoin ETFs in January, which have already attracted over $17.5 billion in cumulative net inflows.
Sergei Gorev, a risk manager at YouHodler, noted, "The market has been eagerly anticipating this milestone for a long time." While Ethereum ETFs are not expected to immediately rival Bitcoin ETFs in terms of investment due to Bitcoin's greater liquidity and market size, analysts predict that Ethereum ETFs could draw monthly net inflows of between $750 million and $1 billion—an impressive figure for a new fund category.
Pat Doyle, a blockchain researcher at Amberdata, highlighted the different value propositions of Bitcoin and Ethereum: “Bitcoin is often seen as digital gold with a fixed supply, serving as an inflation hedge, while Ethereum is viewed as a technological platform and alternative financial system. Despite current geopolitical uncertainties favoring Bitcoin, attention may shift toward Ethereum and other smart contract platforms in the long run.”
Initial market reactions to the spot Ethereum ETF were relatively subdued. According to Alice Liu, research lead at CoinMarketCap, early trading volume for the ETH spot ETF reached $320 million within the first hour, compared to $610 million for the Bitcoin spot ETF in its initial hour. Liu remains optimistic, noting, “We have every reason to be confident about Ethereum ETFs.”
As of the market close, it remains too early to determine the exact net inflows for the new ETFs. Bloomberg’s James Seyffart suggested that early trading volumes are often a better indicator of demand in such cases.