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Ether Spot ETFs Face $500 Million in Outflows, Contrasting Bitcoin Success
Explore the contrasting fortunes of Ether spot ETFs facing $500 million in outflows, while Bitcoin thrives. Discover the reasons behind this divergence and what it means for the future of cryptocurrency investments.
Ether Spot ETFs Experience Significant Outflows
Since their introduction last month, ether spot exchange-traded funds (ETFs) have experienced notable net outflows, contrasting sharply with the more successful debut of spot bitcoin ETFs earlier this year. This observation was reported in a research document released by JPMorgan on Wednesday.
The ether (ETH) ETFs began trading in the United States on July 23, approximately six months after the launch of the bitcoin (BTC) funds. In the five weeks following each launch, the ether funds faced around $500 million in net outflows, while the bitcoin ETFs enjoyed impressive net inflows exceeding $5 billion, as reported by the bank’s research team.
JPMorgan noted that the disappointing performance of ether ETFs was somewhat anticipated due to several factors, including bitcoin’s established “first mover advantage,” the absence of staking opportunities, and lower liquidity, which collectively diminish their attractiveness to institutional investors. However, the bank found the outflow of $2.5 billion from Grayscale’s Ethereum Trust (ETHE) to be unexpected, as they had predicted a more modest outflow of around $1 billion during its transition from a closed-end fund to a spot ETF.
In response to the outflows from ETHE, Grayscale has launched a mini ether exchange-traded fund aimed at recapturing investor interest. Unfortunately, this new ETF has only managed to attract $200 million in inflows so far.
JPMorgan’s team, led by Nikolaos Panigirtzoglou, commented on the growing trend among asset managers to file for a combined ETF that would provide exposure to both bitcoin and ether, reflecting the weaker demand for spot ether ETFs compared to their bitcoin counterparts. The report also highlighted that institutional and retail ownership of spot bitcoin ETFs has remained relatively stable since the first quarter, with retail investors holding approximately 80% of these assets. The bank concluded that most of the newly launched spot bitcoin ETFs were likely acquired by retail investors, either directly or through investment advisors.