Does the Ethereum ETF’s debut meet expectations?

By Jack Inabinet, Bankless; Translated by Baishui, Golden Finance

Spot Ethereum ETFs have completed a full day of trading, leaving everyone wondering: How are these products performing?

While many were disappointed that ETH prices were fairly stagnant on launch day, trading in a relatively tight range, fluctuating just 5% and closing almost flat, by all accounts these launches could have been much worse.

Bitcoin plunged 6% to a new cycle high following the launch of its ETF, with holders suffering a massive 10% loss the following day.

On its first day of trading, spot ETH ETFs saw over $1 billion in volume, with the newly launched non-ETHE fund ranking first among new ETFs in the last 12 months (excluding the very successful BTC ETF).

Although Grayscale's ETHE saw $470 million in outflows yesterday, 5 times more than when GBTC allowed redemptions after its conversion to a spot ETF on January 11, GBTC's continued discount on the first day initially limited redemption activity.

Excluding the large ETHE outflows, the newly launched spot ETH ETF product received $484 million in inflows, which may indicate that investors have excessive demand for ETH.

While many ETHE redemptions are likely being recycled into alternative products, with no impact on net flows, this is equivalent to 79% of the inflows received by the newly launched spot BTC ETF on its debut, an achievement many consider impressive given that ETH has only a third of BTC’s market cap.

The first day of inflows is undoubtedly encouraging for spot ETH ETFs, but their launch is just one milestone in Ethereum’s marathon journey to replace the traditional financial system.

With the world’s largest asset managers now having a direct incentive to promote Ethereum investing, there is hope that the mainstream will finally understand the benefits of permissionless blockchains.

Now, what remains to be seen is whether the new types of investors that the ETF aims to attract can actually be converted into on-chain believers; in which case the resulting inflows could push ETH prices (and adoption) to new all-time highs.