Spot ether ETFs began trading in the U.S. July 23 and products from BlackRock and Fidelity Investments are likely to lead the field when it comes to the race for net inflows in the weeks and months ahead, Bloomberg Intelligence Senior ETF Analyst Eric Balchunas said.
“They’re just the biggest firms, and we saw in the bitcoin race that there was a pretty direct correlation between size and flows,” Balchunas said. “They’re just powerful institutions with large reach, and so I think they’ll probably be one and two.”
The iShares Ethereum Trust ETF and the Fidelity Ethereum Fund were two of the nine spot ether ETFs that began trading on July 23.
The $22.2 billion iShares Bitcoin Trust and the $12.3 billion Fidelity Wise Origin Bitcoin Fund were among the 10 spot bitcoin ETFs that began trading in the U.S. on Jan. 11. Those 10 funds, along with an 11th spot bitcoin ETF that began trading later, have garnered $17.5 billion of net inflows through July 22, the analyst said.
“That puts them on pace to get $30 billion in a year,” Balchunas said.
Bloomberg Intelligence expects flows into spot ether ETFs over the next year to reach only about 20% of spot bitcoin ETF flow levels, coming in somewhere between $5 billion and $6 billion, he said.
“It’s going to seem like, oh, ether underwhelms, but this is like saying you have 20% of the wealth of Bill Gates,” Balchunas said in a reference to the co-founder of Microsoft Corp. “So, ether ETFs to me will be a very successful new launch.”
The reason spot ether ETFs are likely to see less interest than spot bitcoin ETFs is because for most people who aren’t heavily into the cryptocurrency space, “bitcoin kind of scratches their crypto itch, their speculative itch, they understand it’s like digital gold,” he said.
“In my opinion, bitcoin sells itself a little bit easier,” Balchunas said.
Institutional interest in spot ether ETFs is likely to be “a fraction of what bitcoin ETFs will ultimately see,” the analyst said. Still, even institutions are likely to view ether ETFs as a convenient way to gain exposure to ether, he said.
