Ether ETFs Struggle with $500M Outflows, Lag Behind Bitcoin's $5B Inflows

Since their debut last month, ether spot exchange-traded funds (ETFs) have struggled to gain traction, contrasting sharply with the more robust performance of spot bitcoin ETFs earlier this year, according to a recent JPMorgan report.

The Ethereum (ETH) ETFs began trading in the U.S. on July 23, about six months after bitcoin (BTC) ETFs made their entry. In the initial five weeks following their respective launches, the ether funds experienced net outflows of approximately $500 million. In stark contrast, bitcoin ETFs enjoyed net inflows exceeding $5 billion during the same post-launch period, highlighting a significant disparity in investor interest.

JPMorgan attributed the underwhelming performance of ether ETFs to several factors, including bitcoin's "first mover advantage," the absence of staking options, and lower liquidity, which collectively make ether less attractive to institutional investors.

Interestingly, the report highlighted unexpected developments concerning Grayscale's Ethereum Trust (ETHE). The trust saw $2.5 billion in outflows, far surpassing the bank's original estimate of $1 billion as it transitioned from a closed-end fund to a spot ETF. In response to these outflows, Grayscale introduced a smaller ether ETF, but this new offering has only managed to attract $200 million in inflows so far.

The weaker demand for ether ETFs compared to their bitcoin counterparts has led to a growing interest among asset managers in developing a combined ETF that would provide exposure to both bitcoin and ether, the JPMorgan team, led by Nikolaos Panigirtzoglou, noted.

Meanwhile, the bank observed that institutional and retail ownership of spot bitcoin ETFs remained relatively stable from the first quarter, with retail investors holding around 80% of these funds. It appears that most of the new spot bitcoin ETFs were likely purchased by retail investors, either directly or through investment advisors, since their launch.