Underwhelming: week-one demand stays soft for ETH futures ETFs

A clutch of ether futures ETFs have traded on the market for nearly a full week. Yet none have seen inflows anywhere near what their bitcoin futures predecessor reeled in.

The six ether futures ETFs launched by ProShares, VanEck and Bitwise on Monday held less than $20 million in combined assets after four days of trading.

The funds’ lack of growth is stark when compared to demand for the first bitcoin futures ETF. The ProShares Bitcoin Strategy ETF (BITO) grew to $1 billion in assets in its first few days on the market in October 2021.

The VanEck Ethereum Strategy ETF (EFUT) appears to be leading the asset race with $8 million. The ProShares Ether Strategy ETF (EETH) had roughly $6 million, while Bitwise’s pure ethers futures fund — its Bitwise Ethereum Strategy ETF (AETH) had not yet reached $1 million in assets.

Fund group Valkyrie changed the name and investment strategy of its bitcoin futures fund on Tuesday. Now dubbed the Valkyrie Bitcoin and Ether Strategy ETF (BTF), that fund has seen zero net inflows this week, according to ETF.com.

The macroeconomic environment — including a federal funds rate that is currently at 5.33% — has contributed to an overall lower appetite in risk assets. Ether’s (ETH) price was at about $1,630 at 10:30 am ET on Friday — down roughly 2% from seven days ago.

“With the [Treasury] bill yield soaring above the ETH staking yield amidst lackluster on-chain activity, EFUT’s number one position among ETH futures ETFs has been achieved at a relatively low AUM level so far,” said Matthew Sigel, VanEck’s head of digital assets research.

Industry watchers had kept an eye on Monday volumes in the six new ether futures ETFs, which totaled roughly $2 million in aggregate. BITO saw $1 billion in volume on its first day.

Simeon Hyman, global investment strategist at ProShares, told Blockworks it was unfair to compare EETH to BITO’s “historic” debut.

Others noted that BITO launched during a bull market and offers exposure to an asset with a market capitalization more than double that of ETH.

Bloomberg Intelligence analysts Mike McGlone and James Seyffart said in a Sept. 29 research note that while ETH futures ETFs are likely to be a popular tool for traders, they may be “largely ignored” by financial advisers.

Because the ETFs track front-month ether futures, they are likely to offer “high sensitivity” to the asset over the short, and perhaps medium term, the analysts argued. Their ability to track spot prices is expected to break down over time due to the costs of keeping front-month exposure.

“Advisers, familiar with roll costs due to experience with commodity funds, will probably opt to get Ethereum exposure directly, wait for spot ETFs or choose thematic equity-based crypto and blockchain ETFs,” McGlone and Seyffart wrote.

Fund issuers that weighed launching ether futures ETFs likely also had marketing in mind, as some fund groups look to ultimately build extensive crypto ETF suites.

VanEck’s X account has shared videos around the launch of EFUT in a bid to educate investors about the fund’s underlying asset.

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Nate Geraci, president of The ETF Store, pointed to a more recent VanEck post that urged followers to check out the company’s other offerings.

“This is why you launch ether futures ETF even [though] you know spot ETFs will likely be approved in not-too-distant future,” Geraci said in a Thursday X post. “Marketing expense. Plus demonstrate firm is forward-thinking around crypto.”

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