U.S. spot Ethereum exchange-traded funds (ETFs) have experienced a varied start, with net inflows into most ETFs being overshadowed by significant net outflows from Grayscale’s converted fund, ETHE. Data shows that spot Ethereum ETFs saw just over $162 million in total outflows on Friday, July 26, marking the third consecutive day of net negative flows. In contrast, spot Bitcoin ETFs recorded $51.8 million in net inflows on the same day, continuing a trend of positive flows for three days straight.

First Week of Ethereum ETFs in the U.S.

The first-ever spot Ethereum ETFs in the U.S. — nine products from eight issuers — began trading on Tuesday, July 23, following their approval by the Securities and Exchange Commission in May. In their first week of trading, most of the newly launched Ethereum ETFs saw positive inflows, except for Grayscale’s ETHE, which experienced $1.51 billion in net outflows. ETHE’s outflows resulted in an overall weekly outflow of $341.8 million for the ETFs.

BlackRock’s ETHA led the pack in terms of inflows, generating $442 million worth of net inflows, followed by Bitwise’s ETHW with $265.9 million and Fidelity’s FETH with $219.4 million. VanEck’s ETHV and Franklin Templeton’s EZET saw smaller inflows of $35.4 million and $23.3 million, respectively. 21Shares’s CETH received an inflow of $7.5 million only on launch day and saw zero inflows on the following three trading days.

Grayscale’s ETHE, which held around $10 billion in assets (2.9 million ETH) before its conversion to an ETF, allocated $9.2 billion to its ETHE ETF product and just over $1 billion to its ETH fund.

Grayscale’s Two Ethereum ETFs

Major crypto asset manager Grayscale has introduced two spot Ethereum funds to the markets this past week, trading under the tickers ETHE and ETH. The Grayscale Ethereum Trust, ETHE, was initially launched in 2017 as a private placement, meaning it was only available to select investors and institutions in the U.S. Since 2019, the shares of the Ethereum Trust have been publicly traded OTC under the ticker ETHE. OTC trading of ETHE came with a 6-month holding period. However, since ETHE was converted to a spot Ethereum ETF last week, investors gained the ability to sell their holdings more freely.

The 2.5% management fee for ETHE — which is relatively high compared to fees of 0.25% or less from other ETF issuers — has driven investors to switch to competing products with lower fees, spurring the outflows from Grayscale’s fund. This situation is similar to what happened with Grayscale’s Bitcoin Trust (GBTC), which also saw significant outflows after its conversion to a BTC ETF in January.

Likely in anticipation of this trend, Grayscale launched another ETF product this week, the Ethereum Mini Trust (under the ticker ETH). The new product boasts a competitive fee of 0.15%, positioning it as one of the most affordable spot Ethereum funds in the U.S. In contrast to ETHE, Grayscale’s Mini Trust saw inflows every trading day this past week, totaling $164 million.

The ETHE outflows, coupled with a more than 6% drop in the price of Ethereum since the ETFs launched, have reduced Grayscale Ethereum Trust’s assets under management to approximately $7.46 billion (2.28 million ETH).

Ethereum ETFs vs. Bitcoin ETFs: A Comparative Look

The nine newly launched Ethereum ETFs saw total net inflows of $106.7 million on their first trading day, July 23, compared to $628 million in inflows for Bitcoin ETFs on their debut. In terms of trading volume, the ETH ETFs saw around $1.1 billion in trades on their first day, while BTC ETFs saw $4.66 billion in trading volume on their inaugural day.

Throughout the first week, Ethereum ETFs generated a total trading volume of approximately $4.05 billion, compared to $7.85 billion for Bitcoin ETFs in their initial week. Analysts predict that spot Ethereum ETFs will attract inflows ranging from 6% to 48% of those seen by Bitcoin ETFs in the first six months. This estimate suggests total inflows into Ethereum ETFs could reach between $1 trillion and $7.5 trillion by late January 2025.

At the time of writing, ETH, the second-largest cryptocurrency, was trading at $3,280. Its market cap is around $393 billion, with a 24-hour trading volume near $14.4 billion.

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