As a seasoned crypto investor with several years of experience under my belt, I’ve witnessed the evolution of the industry and its various milestones, including the launch of Bitcoin ETFs. The recent approval and launch of spot Ethereum ETFs filled me with a sense of excitement and anticipation.
As a seasoned observer of the cryptocurrency market and having closely followed Ethereum‘s growth over the past few years, I can’t help but feel elated about this week’s approval and launch of Ethereum ETFs. This milestone is a testament to the resilience and innovation of the crypto community, and it’s an exciting time to be part of this dynamic industry.
Spot Ethereum ETFs Surpass Expectations
On Monday, the US Securities and Exchange Commission (SEC) granted approval for the sale of Ethereum-backed exchange-traded funds (ETFs), with a launch date set for Tuesday, July 23. Prior to this announcement, industry insiders and experts engaged in lively discussions regarding the potential impact and performance of Ethereum ETFs relative to their Bitcoin counterparts.
Several individuals hold the view that Ethereum-based ETFs will likely only achieve 20% to 30% of the volume and impact of Bitcoin ETFs. Katherine Dowling, Bitwise’s Chief Commercial Officer, expressed this perspective as the anticipated Ethereum ETFs being a “more subtle pitch” compared to Bitcoin. This viewpoint is also held by entrepreneur Anthony Pompliano from the United States.
Recently, the bullish advocate for Bitcoin, Pompliano, expressed that Ethereum’s tale isn’t as plainly defined as Bitcoin being the “digital gold.” In his perspective, this ambiguity has resulted in less focus and engagement from conventional investors and the press.
Following the debut, Ethereum ETFs surpassed experts’ predictions with approximately $1.05 billion in trading volume on their inaugural day. This represented around a quarter of the initial trading volume experienced by Bitcoin ETFs.
Based on the analysis of Eric Balchunas, an expert at Bloomberg, the eight newly launched Ethereum ETFs attracted $590 million in investments during their first day, which accounted for approximately 83% of the total inflow experienced by the nine recently debuted Bitcoin ETFs on their initial day. This figure exceeded Balchunas’ predictions and marked a robust beginning for these investment vehicles.
Although Grayscale’s Ethereum Trust experienced significant withdrawals to the tune of $484 million, Ethereum ETFs saw a total inflow of $107.8 million on their debut day. Notably, Blackrock’s iShares Ethereum Trust and Bitwise Ethereum ETF attracted substantial investments of $266.5 million and $204 million respectively.
Second-Day Volume Surprises, But Outflows Steal The Show
On the second day, Ethereum ETFs defied expectations, according to expert Balchunas. The volume for some ETFs was comparable to or even surpassed that of the initial day. This trend is considered positive by experts because a significant drop-off in volume often occurs after an exciting first day.
According to Bitwises’ president Teddy Fusaro, revealed on X, the Ethereum ETFs had exchanged approximately $852 million worth of transactions by the midpoint of the second trading day. In contrast, their Bitcoin counterparts handled around $1.1 billion in transactions during the same period.
Fusaro was taken aback by the large disparity between the trading volumes of ETH and BTC exchange-traded funds (ETFs). He remarked that “ETH ETFs account for approximately 75% of the notional value of BTC ETFs currently,” which exceeded his initial estimation. Likewise, James Seyffart expressed his astonishment, admitting that he was “Surprised to find out this was the case.”
Despite a negative closing on Day Two, Farside Investors’ preliminary figures indicate that Ethereum ETFs experienced outflows totaling approximately $133.3 million for ETH-specific funds and $326.9 million for ETHE. These significant withdrawals overshadowed the positive net flows from other Ethereum ETFs.
According to the available data, ETHA and ETHW experienced relatively small net inflows of $17.4 million and $29.6 million on Wednesday. In contrast, Fidelity’s FETH, VanEck’s ETHV, and Grayscale’s Mini Trust recorded higher inflows of $74.5 million, $19.8 million, and $45.9 million, respectively, on the following day.
As an analyst, I would say that the experts’ consensus is that Ethereum ETFs’ launch was “strong” despite a 5% drop in trading volume on its second day. Compared to typical ETF launches, these crypto-backed investment products have outperformed expectations, placing among the top 10% of ETF launches over the past year.
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2024-07-26 10:12