Ethereum ETFs Get a Cold Reception: Why Investors Are No Longer Willing to Pay for Them?
For many investors, the performance of spot Ethereum ETFs has been disappointing.
In contrast, spot Bitcoin ETFs have handled nearly $19 billion in inflows over a 10-month period, while the Ethereum ETF, which began trading in July, has failed to generate the same traction.
To make matters worse, Grayscale’s ETHE, which existed as an Ethereum Trust before converting to an ETF, suffered massive redemptions during the conversion process, and demand from other Ethereum funds failed to offset this trend.
Context of Inflows
First, it’s important to note that Ethereum ETFs don’t look good compared to Bitcoin ETFs. The Bitcoin product has broken many records and is arguably the most successful ETF of all time.
Lack of Staking Yields
One big difference between Bitcoin and Ethereum is that investors can stake Ethereum — essentially locking it up in the Ethereum network to earn yields paid in Ethereum.
However, Ethereum ETFs in their current form do not allow investors to gain exposure to collateral
Difficulty Selling Ethereum to Clients
Another hurdle for Ethereum ETFs is that it may be difficult for some investors to understand Ethereum’s core use case, as it attempts to lead in multiple different crypto sectors.
Bitcoin’s supply is strictly capped: the total number of bitcoins will never exceed 21 million. This makes it relatively easy for investors to view it as “digital gold” and a potential inflation hedge.
Poor Price Performance
There’s also the fact that ETH itself hasn’t performed too well this year compared to BTC.
The second-largest cryptocurrency by market cap is up just 4% since January 1, while BTC has risen 42% and has been hovering around its 2021 all-time high.
