$100M Local Ethereum ETF Debuts: BlackRock Leads, Grayscale Bleeds

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

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

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

Solid first day

Investors are pulling out of the fund because they can now profit from the large premium gap it had before it became a spot basis.

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

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

The big picture wasn’t too bad, though, with $106 million in inflows 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 strong first-day trade with $204 million in inflows.

Meanwhile, the Fidelity FETH fund took in $71 million. There were minor inflows of between $7.5 million and $13 million for 21 stocks, Invesco, VanEck and Franklin on the first day.

UPDATE: The first full day of streams for ETHness holdings is underway. Ethereum ETFs earned $107 million. @BlackRock‘s $ETHA leads the way with $266.5 million followed by @BitwiseInvest‘s $ETHW with 204 million dollars. Very solid first day pic.twitter.com/j28vIwVWvR

— James Seyffart (@JSeyff) July 24, 2024

Seyffart confirmed that funds were not allowed to participate in ETH, as cold storage was the only option due to regulatory restrictions.

ETH price reaction

There was no reactionary bombshell in the Ethereum markets when spot ETFs were 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 Asian trading session on Wednesday morning.

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

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