The eight recently launched spot ethereum {{ETH}} exchange-traded funds (ETFs) posted nearly $600 million worth of volume in the first half of their first day of availability, according to data from Bloomberg.
The race is led by Grayscale’s Ethereum Trust (ETHE) which had seen $250 million of its shares traded by 12:30 pm ET. BlackRock’s iShares Ethereum Trust (ETHA) is in second place with roughly $130 million.
Fidelity’s Advantage Ether ETF had roughly $77 million in volume while Bitwise’s Ethereum ETF had seen $66 million.
“We assume $ETHE volume is mostly outflows,” Bloomberg Intelligence senior ETF analyst Eric Balchunas wrote in a post on X. Grayscale's ETHE, in similar fashion to its Bitcoin Trust (GBTC), entered the race with over $9 billion in assets, thus giving rise to the idea that much of its volume is due to outflows.
On the lower end of the volume spectrum were Invesco and 21Shares, whose ether ETFs after four hours of trading had not yet hit the $10 million mark.
If volume continues at this pace, the newly launched ETFs are on track to reach roughly $940 million on the first day of trading, according to Bloomberg Intelligence ETF analyst James Seyffart. This would be a little over 20% of the volume that the spot bitcoin ETFs saw on the first day.
Lower funding rates could stifle institutional interest
Analysts have been predicting demand for the ether ETFs will be at most 20% of that of the bitcoin ETFs for several reasons, which include lack of name recognition and the inability to stake the cryptocurrency when buying shares of the funds.
Another factor could be ether’s low funding rate, according to 10x Research founder Markus Thielen, who says that bitcoin’s funding rate when the ETFs launched in January was near 15% and increased to 70% in February.
“This brought in many institutional arbitrage funds, which bought the ETFs and shorted the futures against them to pocket the spread,” he wrote Tuesday. “As we pointed out, their buying drove the bullish sentiment in a self-reinforcing process.”
Ethereum’s current funding rate, said Thielen, is significantly lower at 7% to 9%, which could be too low for institutions to consider using the funds for an arbitrage investment, especially given that interest rates are currently at 5%.
“Contrary to the strong Bitcoin Spot ETF flows in February, Ether ETF flows will likely not attract those arbitrage flows instrumental in driving positive sentiment,” Thielen wrote.
