Ethereum ETF inflows could surpass $20b

Investors’ eyes have turned to spot Ethereum ETFs and how the products might perform in the early months after the huge success of Bitcoin funds.

On Tuesday, the first nine U.S. spot Ethereum (ETH) ETFs began trading on national exchanges following the final green light from the Securities and Exchange Commission (SEC). Wall Street players and retail investors can now gain exposure to the cryptocurrency’s second-largest decentralized token, ETH, through a regulated institutional package.

The funds launched with about $10.3 billion in assets under management (AUM), according to Bloomberg’s James Seyffart. Most of that money is in two Grayscale products, one of which is the long-standing Grayscale Ethereum Trust (ETHE).

Here are the starting asset levels for the Ethereum ETFs that launched today. The entire complex starts trading at just under $10.3 billion (almost all $ETHE‘s assets) pic.twitter.com/MAfjObFX4a

— James Seyffart (@JSeyff) July 23, 2024

As giants like BlackRock, Fidelity, and VanEck compete for dominance in the spot ETH ETF market, Alluvial CEO and co-founder Mara Schmiedt told crypto.news to expect revenue of “over $20 billion in the first months after launch.”

The flood of capital into spot Ethereum products will likely push the price of ETH well above its previous peak of $4,878. As of press time, Ether is changing hands at $3,400, about 28% below its all-time high (ATH).

“With approximately 38% of the current ETH supply locked up in staking, bridges, and DeFi, and another 10% sitting on retail exchanges, ETF-driven ETH inflows could have a significant upward price impact,” Schmiedt said.

ETH daily price chart | Source: crypto.news

The Alluvial CEO predicted that the impending supply shock from Ether ETF purchases, combined with the success of spot Bitcoin (BTC) ETFs and rising demand for cryptocurrencies, will paint a stronger bullish thesis for the rest of this cycle.

Staking is notably absent from spot Ethereum ETF trading, but Schmiedt believes this development could present more opportunities than problems.

“An interesting and important difference between BTC and ETH is that staking on Ethereum offers a native rate of return, currently around 3.3%, which could be attractive to investors looking for fixed-income-like alternatives to equities, providing portfolio diversification and inflation protection,” Schmiedt explained in an exclusive note to crypto.news.