Ether ETFs Trade Over $500 Million in Strong Crypto Fund Debut

(Bloomberg) — The first U.S. ETFs that invest directly in ether are recording relatively high trading volumes on their first day of fund openings, with more than half a billion dollars changing hands in the first few hours after market open.

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More than $500 million in stocks were traded across nine exchange-traded funds. That’s a far cry from the $4.6 billion traded when spot Bitcoin ETFs launched in January, but it’s still a strong start for ETFs on the first day. Several of the funds are set to finish the day among the top 50 most-traded U.S. ETFs of all time.

BlackRock’s iShares Ethereum Trust ETF (symbol ETHA) saw $119 million worth of shares change hands as of 12:30 p.m. in New York, according to Bloomberg Intelligence, around the 38th-highest value traded on a day. A product from crypto-native firm Bitwise Asset Management Inc. (ETHW) also saw solid demand, with turnover exceeding $64 million. Meanwhile, Grayscale’s Ethereum Trust, which has been converted into an ETF, saw about $220 million traded at the same time, according to data compiled by Bloomberg.

“There’s a similar audience for Ether ETFs and Bitcoin ETFs,” said Drew Walsh, VP of research and operations at Roundhill Financial. “It’s not a crypto-native audience. It’s people who are new to the asset class and want exposure to crypto.”

Volume does not represent trading or investor inflows. Because of the way funds settle transactions, net flows into or out of products may not be known until at least Wednesday.

The Ether launches come after the first U.S. spot Bitcoin ETFs launched in January to much fanfare and billions of dollars in total inflows. Estimates of how much cash Ether funds could raise vary, with analysts saying one-year flows could be between $4.8 billion and $6.4 billion, according to Wintermute. But analysts at Wintermute say demand could be lower than expected, predicting flows of between $3.2 billion and $4 billion. Meanwhile, analysts at Bloomberg Intelligence predict that Ether-ETF flows are around 20% of those recorded by Bitcoin funds.

Christopher Jensen, head of digital assets research at Franklin Templeton, says investor adoption of Ether ETFs could be faster now that many have had a chance to dabble in Bitcoin funds that launched earlier this year. His team predicts that overall flows for spot Ether ETFs could be around 30% of spot Bitcoin ETF flows, given that Bitcoin’s market cap of over $1.3 trillion is about three times larger than Ether’s.

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“People have already done some of their homework and many have jumped in, so this could be a way to diversify into this new asset class,” he said in a telephone interview.

Still, Citigroup’s Alex Saunders said in a note that Bitcoin has a leading edge, adding that it “has a more easily understood use case because it’s similar to ‘digital gold.’” Current allocations to spot Bitcoin ETFs could satisfy many investors’ desire for crypto exposure. “Given the high correlations between BTC and ETH, some allocations could be split or even left as exposure to the original crypto token,” he wrote. Saunders expects a “potential ceiling” for Ether fund flows of between $4.7 billion and $5.4 billion.

–With assistance from Benjamin Taubman.

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