Inside look at the performance and structure of new Ethereum ETFs

Which of the newly launched Ethereum ETFs are the most promising and why? Continue reading

The cryptocurrency market reached a major milestone with the launch of nine spot Ethereum exchange-traded funds (ETFs) on July 23, following months of anticipation and regulatory hurdles.

Major financial players like Grayscale, BlackRock, Franklin Templeton, Fidelity, VanEck, Bitwise, 21Shares, and Invesco have received the green light following the approval of their S-1 registration statements.

Despite a quiet start, these ETFs made a strong impression, bringing in an impressive $107 million on their first day. However, total outflows reached $341 million in the four days leading up to July 26.

Notably, all of these newly launched funds, except for Grayscale Ethereum Trust, reported net positive inflows on all days. Grayscale Ethereum Trust experienced a sharp outflow of over $1.5 billion in its first four trading days, significantly impacting the overall ETH ETF market.

Let’s examine which ETFs were active on July 26, when the last data was updated, their fee structures and analyze their performance.

Which spot ETH ETFs are live? Grayscale Ethereum Mini Trust

Grayscale has introduced the Ethereum Mini Trust on the New York Stock Exchange (NYSE) under the symbol ETH. The fund stands out for its low-cost structure, charging a management fee of 0.15%.

However, Grayscale has temporarily reduced this fee to 0% for the first six months, effective for up to $2 billion in assets under management (AUM).

Coinbase is acting as custodian. The fund has seen decent early interest, with $15.1 million in inflows in its first round and $164 million in total.

Grayscale Ethereum Trust

Grayscale Ethereum Trust, which trades on the NYSE under the ticker ETHE, was one of the first publicly traded Ethereum funds in the United States, initially launching in 2017.

Now converted to an ETF, the fund charges a hefty 2.5% fee. Likely due to its high fees, the fund experienced significant outflows, $484.1 million on the first day and $326.9 million on the second day, for a total of $1.5 billion. Coinbase acts as the custodian for this fund.

Franklin Ethereum ETF

Franklin Templeton, another global leader in asset management, has launched its Franklin Ethereum ETF on the Chicago Board Options Exchange (CBOE) with the ticker EZET.

The fund charges a post-exemption fee of 0.19%, with fees reduced to 0% for the first $10 billion of fund assets through Jan. 31, 2025. Coinbase is the custodian. The ETF has performed well so far, generating total inflows of $23.3 million.

VanEck Ethereum ETF

VanEck, a $90 billion investment management firm, has launched its VanEck Ethereum ETF on the CBOE under the ticker ETHV. The fund charges a 0.20% fee, but that fee will be reduced to 0% until July 22, 2025, or the first $1.5 billion in assets under management.

Gemini, another respected custodian in the crypto space, is being used for this ETF. The ETF saw $7.6 million in inflows in its first round, bringing its total to $35.4 million.

Bitwise Ethereum ETF

Bitwise has launched the Bitwise Ethereum ETF on the NYSE under the symbol ETHW. The fund charges a low 0.20% management fee for the first $500 million in assets, with the fee set at 0% for the first six months.

In addition to low fees, Bitwise has pledged to donate 10% of its profits to Ethereum developers. Coinbase is the custodian of this ETF.

The fund has performed strongly to date, with first-day inflows of $204 million, bringing total investments to $265 million.

21Shares Core Ethereum ETF

The 21Shares Core Ethereum ETF trades on the CBOE under the ticker CETH and charges 0.21%. Coinbase is the custodian of this ETF. The fund saw $7.5 million in inflows on its first day, but has not seen additional inflows since.

Fidelity Ethereum Fund

Fidelity Investments, a major provider of workplace retirement plans, has launched the Fidelity Ethereum Fund on the CBOE under the symbol FETH. The fund carries a fee of 0.25%, but Fidelity will not charge any fees until the end of this year.

Fidelity is holding its ETH privately, which may appeal to those who trust Fidelity’s long-standing reputation in the financial sector. The fund saw strong inflows of $71.3 million on its first day, bringing its total to $219 million.

iShare Ethereum Trust

BlackRock, the world’s largest asset manager with $10 trillion in assets under management, launched the iShares Ethereum Trust ETF on NASDAQ with the ticker ETHA.

This fund has a 0.25% sponsor fee, but with a one-year exemption, the fee drops to 0.12% for the first $2.5 billion in assets under management (AUM).

Coinbase is the custodian of this fund. It saw significant inflows on the first day, with $266.5 million for a total of $442 million.

Invesco Galaxy Ethereum ETF

Invesco has partnered with Galaxy Asset Management to launch the Invesco Galaxy Ethereum ETF on the CBOE under the ticker QETH. The fund charges a 0.25% fee, with Coinbase as the custodian. The ETF saw $5.5 million in first-day inflows, bringing its total inflows to $14.2 million.

Coinbase has the advantage

Coinbase is the custodian of most newly launched spot Ethereum ETFs, giving it a unique advantage in the market.

As a custodian, Coinbase securely stores the Ether that backs these ETFs, a role that requires trust and reliability. This is not new territory for Coinbase, which also serves as the custodian of many spot Bitcoin ETFs.

From a financial perspective, custody services provide a stable revenue stream for Coinbase. As the crypto market expands, the volume of assets they manage grows, strengthening Coinbase’s market position and improving its revenue base.

This increased optimism is reflected in Coinbase’s stock price, which has nearly doubled in the past six months, putting the company in a comfortable position.

The road ahead for spot ETH ETFs

According to Eric Balchunas, senior analyst at Bloomberg ETFs, the iShares Ethereum Trust (ETHA) had the highest first-day trading volume of all new ETFs launched in the past year, excluding Bitcoin ETFs.

I was curious to see how Eth ETFs would rank in terms of Day One volume compared to the nearly 600 new investments launched in the last 12 months, but *excluding btc ETFs* and $ETHA It would be #1 (by a huge margin), $CONQUEST #2, $ETHW #5 and $ETH 7th and $ETHV 13th place. And $CETHThe lowest in the group, however… pic.twitter.com/qXJFcuupi5

— Eric Balchunas (@EricBalchunas) July 23, 2024

ETHA was followed by Fidelity’s FETH in second, Bitwise’s ETHW in fifth, Grayscale’s ETH in seventh, and VanEck’s ETHV in thirteenth. Even 21Shares’ CETH, the lowest in the group, was in the top 10% of new launches.

Meanwhile, Matt Hougan, Chief Investment Officer at Bitwise, shared his thoughts on the future demand for these products. He believes that spot Ethereum exchange-traded products (ETPs) could generate $15 billion in net flows within the first 18 months.

At this point, things are looking promising for these ETFs. Initial trading volumes and inflows suggest that investors are willing to invest in Ethereum through regulated products.

As more people understand and feel comfortable with Ethereum and other cryptocurrencies, demand for these ETFs will likely increase even further.

But nothing is guaranteed and the tides can change at any time, so trade and invest wisely. Never invest more than you can afford to lose.

Disclosure: This article does not provide investment advice. The content and materials contained on this page are for educational purposes only.