Ethereum ETFs Set to Mirror Bitcoin’s Success: Will They Capture the Same Market Buzz?

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The launch of spot Ethereum exchange-traded funds (ETFs) on July 23 sparked significant market interest, with initial inflows exceeding $100 million. This marked a notable shift from the previous four days of outflows for U.S. spot Ether ETFs, which saw a total of $33.67 million in new investments. 

However, this figure was partly offset by a $120.28 million outflow from Grayscale’s Ethereum Trust (ETHE). However many crypto analysts believe that Ethereum ETF will soon follow the bitcoin path.

Ethereum ETF To Follow Bitcoin

Katalin Tischhauser, Head of Investment Research at Sygnum Bank and a former Goldman Sachs executive predicted that spot Ether exchange-traded funds could attract up to $10 billion in assets under management within their first year.

She also forecasted that Bitcoin ETFs could see inflows ranging from $30 billion to $50 billion in their initial 12 months, with Ethereum products likely following suit.

Tischhauser noted that Ethereum investments offer distinct advantages over Bitcoin. While Bitcoin is viewed primarily as a store of value, Ethereum’s value is derived from revenues and cash flows. This makes Ether more relatable for traditional institutional investors compared to Bitcoin’s perception as “digital gold.”

Fee Waivers to Attract Institutional Investors

To attract institutional investors, several ETF issuers are waiving fees for their spot Ethereum funds. Franklin Templeton announced a 0.19% sponsor fee but will waive it for the first $10 billion in assets for six months. Meanwhile, Bitwise and VanEck will charge a 0.20% fee until some point in 2025.

BlackRock has revised its registration statement for its spot Ethereum ETF, ETHA, to include a 0.25% management fee. Grayscale has launched its Grayscale Ethereum Mini Trust with the same 0.25% fee.

Ethereum ETFs Exclude Staking

However, enthusiasm is tempered by the absence of staking rewards from these ETFs. In May, BlackRock, Grayscale, and Bitwise removed staking provisions from their SEC applications after discussions with the SEC. 

As traditional investment institutions are limited by regulations and legal constraints, they can only invest through ETFs, missing out on staking