Ether (ETH) spot exchange-traded funds (ETFs) have struggled to attract investor interest since their launch in the United States last month, according to a recent report by JPMorgan. Despite the growing popularity of cryptocurrencies, ether ETFs have seen net outflows of $500 million compared to the strong inflows of over $5 billion experienced by bitcoin ETFs earlier this year.
JPMorgan attributed the weaker performance of ether ETFs to several factors. Firstly, bitcoin’s “first mover advantage” and established market position have given it a significant edge. Secondly, the lack of staking capabilities for ether, a feature that has attracted investors to bitcoin, has also contributed to the lower demand for ether ETFs. Finally, the lower liquidity of ether compared to bitcoin may have made it less appealing to institutional investors.
One of the more surprising developments was the $2.5 billion in outflows from Grayscale’s Ethereum Trust (ETHE) following its conversion to a spot ETF. JPMorgan had anticipated outflows of around $1 billion but observed significantly higher redemptions. In response, Grayscale launched a mini ether ETF, but it has only attracted $200 million in inflows.
Given the weaker demand for spot ether ETFs compared to bitcoin, JPMorgan’s team believes there is growing interest among asset managers in filing for combined ETFs that offer exposure to both bitcoin and ether. This could provide investors with a more diversified approach to investing in cryptocurrencies.
Also Read: Ethereum ETFs – Hype vs. Reality – 8 Funds, $2B Inflows, Price Stagnant
The report also revealed that institutional and retail ownership of spot bitcoin ETFs has remained relatively unchanged since the first quarter, with retail investors holding around 80% of the total holdings. This suggests that most of the new spot bitcoin ETFs have been purchased by retail investors, either directly or through investment advisors.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
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