You may not even realize it, but spot Ethereum ETF products launched on July 23, with 9 ETFs now available for investment. As most would have predicted, the launch of Ethereum ETFs was much less momentous than the launch for Bitcoin. It doesn’t help that markets have seriously retracted over the last week but we’ll dive into those numbers shortly.
Though it is certainly a good thing for the crypto sector, the soft demand for spot Ethereum ETF products thus far is worth noting, as it could paint a picture for the launch of other crypto asset ETF launches in the future.
ETH Launch Tame Compared to Bitcoin
When it was first announced that the SEC was going to potentially approve spot ETH ETFs, there were some analysts that felt like it wouldn’t mean that much for the ETH market. The high fees for using Ethereum, and the overall competition from other ecosystems is much higher for ETH than for Bitcoin. Most investors can count on Bitcoin being the best store of value asset, but the same can’t be said for Ethereum being the best platform for DeFi.
That last statement seems to be being proven thus far with the performance of the Ethereum ETFs, which actually saw net outflows of $340 million in their first week after launch. Much like with Bitcoin’s ETF launch, the Grayscale ETF product being converted to an open ETF has led to much selling by investors.
Comparatively, Bitcoin saw $1 billion in net inflows even though there was also outflow from Grayscale, albeit at a much lower rate than the outflow currently being seen for ETH. This start difference is leading some to wonder just how much demand there may be for ETH ETF products.
Will Demand for ETH ETFs Increase?
Currently, there will likely need to be some sort of catalyst that increases demand for ETH as an investment asset through ETFs. Net outflows are now over $435 million for Ethereum ETFs, with a lack of demand for purchasing the asset on exchanges, and a lack of taking ETH off exchanges like was seen with Bitcoin after its launch.
The price of ETH is likely to rebound as selling pressure subsides, but the chances of it exploding the way Bitcoin did to a new all time high after that point is lower. During the same timeframe that ETH ETFs saw net outflows, spot Bitcoin ETFs added another $50 million in inflows. It seems clear which product is more favored, at least to this point.
What About Other Crypto ETFs?
The lack of demand for spot Ethereum ETFs is likely a good reference for what could happen if other crypto assets get spot ETF products. BlackRock has already stated that their clients make little to no mention of interest in assets other than the big two of Bitcoin and Ethereum, and there would likely need to be a catalyst for another asset to go up like Bitcoin did.
Closing Thoughts
The launch of spot Ethereum ETFs has been much more muted than that of the spot Bitcoin ETFs, and for good reason.
Ethereum just isn’t as clear of a winner in the sector as Bitcoin is, because it has obvious competition from networks like Solana, Cardano, and Avalanche. It seems likely that none of these assets will see much of a boost through the launch of an ETF the way Bitcoin did, but only time will tell.
