(Bloomberg) – U.S. exchange-traded funds that invest directly in Ether raised a net $107 million in their first day of trading in launches that will provide a window into mainstream crypto demand outside of Bitcoin.
According to data compiled by Bloomberg, BlackRock Inc.'s iShares Ethereum Trust. achieved a net inflow of $267 million – the largest of the group – followed by Bitwise's Ethereum Trust with $204 million and the Fidelity Ethereum Fund with $71 million.
More than $1 billion worth of shares traded in the nine ETFs, whose launch comes six months after U.S. regulators allowed the inauguration of U.S. spot-Bitcoin ETFs. The latter have attracted a net inflow of over 17 billion dollars this year.
Read more: Ether ETFs trade over $1 billion in crypto fund's strong debut
Ether is the second-largest digital asset and popular for blockchain-based financial services, but the token's market value is still less than a third of Bitcoin, fueling expectations of smaller inflows compared to ETFs. of Bitcoin.
Investment Narrative
Bitcoin funds benefited from a controversial narrative that presents the primary token as digital gold, a spin that Ether lacks. Ether funds will also not offer so-called staking rewards for blockchain maintenance, a return that can be leveraged by owning the token directly.
“The flows are in line with our expectations,” he said Vivien Wong, a partner in crypto investor HashKey Capital. It expects $3 to $5 billion in net inflows to Ether wallets over the next six months.
Eight new Ether funds were listed on Tuesday as the more than six-year-old Grayscale Ethereum Trust — the largest for Ether with $8.6 billion in assets — converted from a closed-end structure to an ETF. The conversion smooths the outflows for arbitrageurs and the product saw a net outflow of $484 million.
There is a risk that such exits could counteract the positive impact of new subscriptions, potentially putting “downward” pressure on the market, Wong said.
After Bitcoin
Ether fell less than 1% to $3,458 as of 8:41 a.m. in New York. The cryptocurrency's 85% surge during a rally in digital assets over the past year follows a 125% surge in Bitcoin, which hit a record high in March.
US Ether ETFs posted “a very solid first day of trading,” said Bloomberg Intelligence ETF Analyst Rebecca Sin. She added that “the Ether market is much smaller than the Bitcoin market, so education is critical as we are only at the beginning of a long journey.”
The US Securities and Exchange Commission in May surprisingly moved toward approving spot-Ether ETFs after reluctantly allowing Bitcoin funds in the wake of a 2023 court reversal.
The agency hit the digital asset industry after the collapse of the FTX exchange, but pro-crypto Donald Trump's push to return to the White House had sparked speculation of a friendlier climate ahead.