Investors are closely watching the performance of spot Ethereum ETFs following the success of Bitcoin funds. On Tuesday, the first nine U.S. spot Ethereum ETFs began trading on national exchanges after receiving approval from the Securities and Exchange Commission (SEC). This development allows both Wall Street players and retail investors to gain exposure to Ethereum (ETH), the second-largest decentralized token, through a regulated institutional product.

According to James Seyffart from Bloomberg, these funds debuted with nearly $10.3 billion in assets under management (AUM). A significant portion of this capital is concentrated in two Grayscale products, including the long-standing Grayscale Ethereum Trust (ETHE).

Initial Asset Levels for Ethereum ETFs

Here are the starting asset levels for the newly launched Ethereum ETFs, which commenced trading with just shy of $10.3 billion, primarily sourced from ETHE’s assets.

“As major players like BlackRock, Fidelity, and VanEck compete in the spot ETH ETF market, we can expect over $20 billion in the initial months post-launch,” said Mara Schmiedt, CEO and co-founder of Alluvial.

Capital moving into spot Ethereum products is likely to drive ETH’s price significantly higher than its previous peak of $4,878. Currently, Ether is trading at $3,400, approximately 28% below its all-time high (ATH).

Implications of ETF-Driven ETH Inflows

Schmiedt commented, “With around 38% of the current ETH supply locked in staking, bridges, and DeFi, and another 10% on retail exchanges, ETF-driven ETH inflows could have a significant upward price impact.”

Alluvial’s CEO also predicted that the upcoming supply shock from Ether ETF buying, combined with the success of spot Bitcoin ETFs and increased demand for cryptocurrencies, supports a strong bull thesis for the rest of this cycle.

Staking and Ethereum ETFs

Interestingly, staking is not part of the trading strategy for spot Ethereum ETFs. However, Schmiedt believes this could present new opportunities rather than challenges. “An essential difference between BTC and ETH is that staking on Ethereum offers a native rate of return, currently around 3.3%. This could attract investors looking for fixed income-like alternatives to equities, aiding portfolio diversification and providing an inflation hedge,” Schmiedt explained.

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