To spur ETH ETF inflows, ‘the first catalyst is education’

Spot ether ETFs — available on the US market for just over a month now — notched their ninth straight day of net outflows Tuesday. 

The category’s net flows remain in the red at $482 million since their late July launch, according to Farside Investors data. 

Read more: One month in the books for US spot ETH ETFs

Bitcoin ETFs saw collective positive flows for eight straight days during that span, though the streak came to an end on Tuesday. 

The BTC funds’ $252 million of net inflows on Aug. 23 (the most in a single day since July 22) came the same day Federal Reserve Chair Jerome Powell hinted at a rate-cutting cycle. Contrarily, about $13 million left ether ETFs that day. 

The inflows thus showed “bitcoin’s sensitivity to interest rate expectations,” CoinShares research head James Butterfill wrote in a Monday report. 

So monetary policy can be a bitcoin catalyst. But what will spur ether ETF inflows? 

“The first catalyst is education,” Grayscale Investments managing director John Hoffman told Blockworks.

“There’s just less awareness of ether relative to bitcoin,” he added. “Increasingly we’re having those conversations and helping investors understand the differences and why an allocation to both bitcoin and ether can be additive to the portfolio construct.”

Read more: A deeper look at Grayscale’s spin-off ETF launches, crypto outlook

Analysts and executives agree the wealth management segment will ultimately be a major driver of crypto adoption in the months and years ahead.

Bitwise research head Ryan Rasmussen previously noted that advisers are “very slowly” getting up to speed with crypto. Financial pros he met with recently were “shocked and fascinated to learn that Ethereum is a technology platform that generates cash flow and pays out a dividend-like yield to stakers,” he added.

Read more: The ‘excited’ tone around crypto’s institutional progress

Historically, there was the perception of “reputation risk” for those allocating to the crypto asset class, Hoffman said. 

“What we’ve seen now with the spot bitcoin and spot ethereum ETFs is that risk, in a lot of ways, has inverted,” he said. “Investors now see that they have potential career risk and reputation risk if they have not done the work on this asset class.”

“The reason why is that their clients are asking them about this space now in a much more pronounced way than we’ve ever seen before,” Hoffman added.

The eight new spot ETH offerings — excluding the higher-priced Grayscale Ethereum Trust (ETHE), which has seen outflows of $2.5 billion — have welcomed nearly $2.1 billion of new assets in their first 26 trading days. 

Inflows into BlackRock’s iShares Ethereum Trust (ETHA) stand at $1 billion, while the Fidelity Ethereum Fund (FETH) sits at second in the category, with flows of $392 million.

The Bitwise Ethereum ETF (ETHW) and the Grayscale Ethereum Mini Trust (ETH) place third and fourth, reeling in $314 million and $236 million, respectively.

“We’re 30 days in, we’re in the middle of summer and by all metrics these are very, very successful launches,” Hoffman said. “The trajectory is education, understanding, portfolio implementation and then flows.”

---

Get the news in your inbox. Explore Blockworks newsletters:

• Blockworks Daily: The newsletter that helps thousands of investors understand crypto and the markets, by Byron Gilliam.
• Empire: Start your morning with the top news and analysis to inform your day in crypto.
• Forward Guidance: Reporting and analysis on the growing intersection of crypto and macroeconomics, policy and finance.
• 0xResearch: Alpha directly in your inbox. Market highlights, data, degen trade ideas, governance updates, token performance and more.
• Lightspeed: Built for Solana investors, developers and community members. The latest from one of crypto’s hottest networks.
• The Drop: For crypto collectors and traders, covering apps, games, memes and more.