Did Ethereum's ETF Debut Meet Expectations?
Spot Ethereum ETFs have completed one full day of trading, leaving one question on everyone's minds: how did these products perform?
While many were disappointed that ETH price was fairly stagnant on launch day, trading within a relatively tight 5% range and closing the day practically flat, all things considered, the launch of these products could have been much worse.
Bitcoin plunged 6% when its ETF launched after ripping to cycle highs, with holders suffering massive 10% losses on the day following.
On day one of trading, spot ETH ETFs did over $1B in volume, with the newly launched non-ETHE funds ranking top among new ETF launches in the past 12 months when excluding the highly successful BTC ETF launches.
I was curious how the Eth ETFs would rank in Day One volume vs all 600 or so new launches in the past 12mo but *excluding* the btc ETFs and $ETHA would be #1 (by a lot), $FETH #2, $ETHW #5 and $ETH 7th, and $ETHV in 13th spot. And $CETH, which was lowest among group, would still… pic.twitter.com/qXJFcuupi5
— Eric Balchunas (@EricBalchunas) July 23, 2024
Although Grayscale’s ETHE experienced $470M in outflows yesterday, 5x higher than those experienced by GBTC when redemptions were enabled upon its conversion into a spot ETF on January 11, GBTC’s continued discount into the first day initially limited redemption activities.
Excluding sizable ETHE outflows, newly launched spot ETH ETF products received a healthy $484M in inflows, potentially speaking to outsized investor demand for ETH.
While many ETHE redemptions were likely cycled into alternative products and had zero impact on net flows, this amounts to 79% of the inflows received by newly launched spot BTC ETFs on their debut, a feat many have considered impressive due to ETH only possessing one-third of BTC’s market capitalization.
BTC vs ETH ETFs Day 1 Comparison:
— Juan Leon (@singularity7x) July 24, 2024
Total ETH flows ($108M) were 16% of BTC flows ($655M), but 79% if you exclude the outflows from ETHE ($484M)/GBTC ($95M) conversions.
ETHE outflows likely larger because it was already trading at NAV on conversion, while GBTC was still at… pic.twitter.com/7E4iGKA7Vr
First day flows were certainly encouraging for spot ETH ETFs, but their launch is merely a mile marker on the marathon journey for Ethereum to supplant the traditional financial system.
With the world’s largest asset managers now having a direct incentive to promote Ethereum investments, there is hope that the mainstream will finally understand the benefits of permissionless blockchains.
Now, all that remains to be seen is whether the new types of investors that ETFs are intended to attract can actually convert onchain disciples; the inflows that follow in this scenario could catapult ETH price (and adoption) to new all-time highs.