Spot Ethereum ETF products are faring below expectations, including BlackRock’s iShares Ethereum Trust.
Key Notes
- BlackRock Exec just acknowledged its Ethereum ETF underperformance.
- He said the narrative of Digital Gold favored Bitcoin, a luxury Ethereum does not have.
- Overall, the BlackRock Exec considers its Ethereum ETF product a fair success.
In the last two months since launch, spot Ethereum ETF, iShares Ethereum Trust (ETHA) product from BlackRock Inc (NYSE: BLK) has seen some inflows, but it hardly measures up to how well the firm’s iShares Bitcoin Trust (IBIT) performed when it was two months old. The volumes and inflows do not match up in any way. BlackRock’s head of digital assets, Robert Mitchnick, does not see the negative narrative changing anytime soon.
BlackRock Exec Says Ethereum’s Investment Story Is Cumbersome
The BlackRock executive attended the Messari Mainnet conference in New York and spoke about ETHA’s performance. He described it as underwhelming compared to IBIT but acknowledged its milestone against ETFs overall. Noteworthy, the fund recently surpassed $1 billion in net asset value, becoming the second spot Ethereum ETF to achieve this after Grayscale’s Ethereum Mini Trust.
“It’s very rare that you see an ETF get to a billion AUM in seven weeks, as ETHA did. In most cases, it takes multiple years to never for a new ETF to get to a billion.”
When BlackRock launched its spot Bitcoin ETF in January, it attracted several institutional investors and recorded huge success. Within 15 days of launch, IBIT hit $2 billion in assets under Management (AUM). Over the last nine months, it has continued to grow and currently sits at $24 billion.
On the other hand, it took ETHA one month to reach $1 billion, and it is still hovering around this level.
The BlackRock Exec attributed this outlook to how cumbersome the Ethereum
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investment story and narrative are for many investors. This understanding of the ETHA fund’s limitations has led BlackRock to stay “committed to the education journey that we’re on with a lot of our clients”.
Therefore, it should not be expected that the Ethereum fund will perform as well as its BTC counterpart regarding flows and AUM.
“But it’s still a pretty good start,” Mitchnick stated.
Spot Ethereum ETFs Sees a Mix of Flows
Beyond BlackRock Ethereum ETF, the United States spot ETH ETFs are not performing optimally as expected. On September 23, the funds saw more than $79 million in outflows, suggesting a gradual decline in interest amongst institutional investors. Based on data from Farside Investors, Grayscale Ethereum ETF (ETHE) led the outflows with $80.6 million.
On the other hand, Bitwise’s ETHW recorded inflows of $1.3 million. The other spot, Ethereum ETFs, had zero inflows, and this trend has been ongoing for a few days. The waning interest in spot Ethereum ETFs is partly linked to the fact that the underlying cryptocurrency does not enjoy the “digital gold” status that BTC
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does.
Hence, investors are more likely to plunge their funds into a Bitcoin-based investment product than their Ethereum counterparts.
Amidst the dwindling interest, Ethereum ETFs still recorded inflows of up to $87 million globally last week. Surprisingly, US spot Ethereum ETFs led the inflows with $85 million. This was the largest net weekly inflow these funds had seen since early August.
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Benjamin Godfrey is a blockchain enthusiast and journalist who relishes writing about the real life applications of blockchain technology and innovations to drive general acceptance and worldwide integration of the emerging technology. His desire to educate people about cryptocurrencies inspires his contributions to renowned blockchain media and sites.
