On Tuesday, spot ethereum exchange-traded funds (ETFs) went live for the first time, heralding a historic moment for U.S. crypto investors eager to see the second-largest cryptocurrency by market cap get the attention of mainstream investors and Wall Street.
BlackRock, Fidelity, VanEck, Bitwise, 21Shares, and others were among the Wall Street issuers unveiling the new investment funds to investors. In total, the new funds garnered more than $1 billion in trading volume.
The launch of spot ethereum ETFs comes on the heels of January’s approval of spot bitcoin ETFs, which have already garnered more $17.5 billion in cumulative net inflows.
“The market has been waiting for this milestone for a very long time,” said Sergei Gorev risk manager at YouHodler.
DAY ONE in the books for Eth ETFs who did $1b in total volume, which is 23% of what the spot bitcoin ETFs on their first Day and $ETHA did 25% of $IBIT‘s volume. The gap between $ETHE and The Newborn Eight is a healthy +$625m (a sizable chunk of which *should* convert to inflow pic.twitter.com/jaP4dKLrOs
— Eric Balchunas (@EricBalchunas) July 23, 2024
In the short-term at least, ethereum ETFs are not expected to draw in as much investment as bitcoin ETFs, which enjoy higher liquidity and a larger market size. But crypto analysts do see ethereum ETFs attracting monthly net inflows of between $750 million to $1 billion, an impressive level for a new ETF fund class.
“Bitcoin and ethereum present distinct value propositions to investors,” explained Pat Doyle, blockchain researcher at the crypto data analytics firm Amberdata. “Bitcoin is perceived as digital gold with a fixed supply, serving as an inflation hedge. In contrast, ethereum is seen more as a technological platform and alternative financial system. Given the current geopolitical uncertainties, bitcoin will likely continue to be the primary asset of interest. However, in the long term, I believe focus will shift towards ethereum and other smart contract platforms.”
Although the initial market reaction to the spot ethereum ETF was modest, according to Alice Liu, research lead at CoinMarketCap, some crypto analysts say there is reason to be hopeful: “We have every reason to feel confident,” Liu said. “In the first hour, the trading volume for the ETH spot ETF reached $320 million, compared to $610 million for the bitcoin spot ETF during its initial hour.”
As of market close, it was too soon to tell exactly how much the new ETFs were able to attract in net inflows as a group. As Bloomberg’s James Seyffart explained Monday, volumes are often better proxies for demand in early trading.
Read More: Ethereum ETFs surpass $1 billion in volumes on first day of trading
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