The Ethereum spot ETF is expected to begin trading by mid-to-late July. Galaxy Digital estimates these ETFs could attract $5 billion in inflows within the first five months. This report analyzes Ethereum ETF performance projections by comparing them to Bitcoin spot ETF trends.
Key Takeaways
- Bitcoin ETF Benchmark: Bitcoin spot ETFs (launched January 11, 2024) accumulated $15.1 billion in net inflows by June 15, 2024.
- Ethereum ETF Landscape: Nine issuers are preparing to launch ten Ethereum spot ETFs in the U.S. The SEC approved all 19b-4 filings on May 23, with trading anticipated to start in July 2024.
- Inflow Projections: We estimate Ethereum ETFs will capture 20–50% of Bitcoin ETF inflows during their first five months, targeting 30% ($1 billion monthly).
- Price Sensitivity: ETH may exhibit higher price sensitivity to ETF inflows than BTC due to supply constraints (e.g., staking, cross-chain bridges, smart contracts) and lower exchange-held reserves.
Background
Current Ethereum ETF Applications
Nine issuers are vying to launch ten spot ETH exchange-traded products (ETPs). Notable developments:
- Approvals: SEC greenlit all 19b-4 filings on May 23.
- Timeline: Trading is projected to start by July 2024, pending S-1 registration statement approvals.
👉 Explore Ethereum ETF updates
Bitcoin ETF Performance as a Baseline
Bitcoin spot ETFs have demonstrated robust demand since their January 2024 launch:
- Total Inflows: $15.1 billion by mid-June (~4.4% of BTC circulating supply).
- GBTC Outflows: Grayscale’s converted ETF saw significant outflows initially but stabilized by May.
Demand Drivers
- Retail Dominance: 80% of inflows came from retail investors, per 13F filings.
- Institutional Interest: Hedge funds (e.g., Millennium, Citadel) and banks (e.g., JPMorgan) have begun allocating to BTC ETFs.
- Wealth Platforms: Major platforms like Morgan Stanley are cautiously exploring BTC ETF offerings.
Ethereum ETF Inflow Projections
Comparative Metrics
| Metric | BTC | ETH | Ratio (BTC:ETH) |
|---|---|---|---|
| Market Cap | $1.3T | $450B | 2.9:1 |
| Futures Market Size | 2x ETH | – | 2:1 |
| Grayscale Trust AUM | $58B | $11B | 5.3:1 |
We estimate ETH ETF inflows at 30% of BTC’s (range: 20–50%), translating to ~$1 billion monthly.
Challenges
- No Staking Rewards: Non-staked ETH forfeits ~5.6% annual yield, potentially reducing ETF appeal.
- ETHE Outflows: Grayscale’s ETHE conversion may mirror GBTC’s initial outflows (~$1.1B monthly).
ETH vs. BTC Price Sensitivity Factors
Supply Dynamics
| Factor | BTC Adjustment | ETH Adjustment |
|---|---|---|
| Staked Supply | 0% | -8.2% |
| Dormant/Lost Coins | -8.3% | -3.4% |
| Cross-Chain/Smart Contracts | -0.4% | -2.9% |
| Total Adjusted Supply | -8.7% | -14.4% |
ETH’s tighter supply and lower exchange reserves suggest higher price sensitivity to ETF inflows than BTC.
Future Outlook
Key Questions
- Portfolio Allocation: Will investors rebalance from BTC to ETH, or hold both?
- Staking Integration: Can staking be added to ETFs to enhance yields?
- Altcoin Implications: Could ETH ETF approval pave the way for other altcoin ETFs?
Broader Impact
- Market Legitimization: ETF approval signals regulatory acceptance, boosting institutional confidence.
- Adoption Acceleration: Expanded access via trusted financial platforms may drive long-term ETH demand.
FAQ Section
1. When will Ethereum spot ETFs start trading?
Expected by mid-to-late July 2024, pending SEC approval of S-1 filings.
2. How much capital could flow into Ethereum ETFs?
Galaxy Digital projects $5 billion within five months (~30% of Bitcoin ETF inflows).
3. Why is ETH more price-sensitive to ETF inflows than BTC?
ETH’s lower available supply (due to staking, smart contracts) and higher demand create tighter liquidity conditions.
4. Will Grayscale’s ETHE impact Ethereum ETF performance?
Yes, ETHE conversion may initially drive outflows similar to GBTC’s post-conversion trend.
5. Can staking be integrated into Ethereum ETFs later?
Possible, but current U.S. regulatory uncertainty makes near-term integration unlikely.
6. What’s the long-term outlook for Ethereum post-ETF?
ETF adoption could mirror Bitcoin’s trajectory, with heightened institutional involvement and price stability.