Inside look at the performance and structure of new Ethereum ETFs

Which of the newly launched Ethereum ETFs are showing the most promise, and why? Read on

Table of Contents

• Which spot ETH ETFs are live?
• Coinbase at an advantage
• The road ahead for spot ETH ETFs

On July 23, the crypto market reached a key milestone with the launch of nine spot Ethereum exchange-traded funds (ETFs), following months of anticipation and regulatory hurdles.

Major financial players including Grayscale, BlackRock, Franklin Templeton, Fidelity, VanEck, Bitwise, 21Shares, and Invesco received the green light after their S-1 registration statements were approved.

Contrary to a quiet debut, these ETFs made a strong impression, netting an impressive $107 million on their first day. However, by July 26, the total outflows over four days reached $341 million.

Notably, all these newly launched funds, except for the Grayscale Ethereum Trust, reported net positive inflows on all days. The Grayscale Ethereum Trust experienced a stark outflow of over $1.5 billion in the first four trading days, which markedly impacted the overall ETH ETF market.

Let’s dive deeper into which ETFs are now active, explore their fee structures, and analyze their performance as of July 26, when the latest data were updated.

Which spot ETH ETFs are live?

Grayscale Ethereum Mini Trust

Grayscale has introduced the Ethereum Mini Trust on the New York Stock Exchange (NYSE) with the ticker ETH. This fund stands out due to its low-cost structure, charging a management fee of 0.15%.

However, Grayscale has temporarily waived this fee to 0% for the first six months, applicable for up to a maximum of $2 billion in assets under management (AUM).

Coinbase serves as the custodian. The fund saw decent early interest, with inflows of $15.1 million on its first, totaling $164 million.

Grayscale Ethereum Trust

Grayscale Ethereum Trust, also on the NYSE under the ticker ETHE, was one of the first publicly traded Ethereum funds in the U.S., originally launched in 2017.

Now converted to an ETF, it charges a hefty fee of 2.5%. Probably due to its high fees, the fund experienced substantial outflows, with $484.1 million on the first day and $326.9 million on the second day, totaling $1.5 billion. Coinbase acts as the custodian for this fund.

Franklin Ethereum ETF

Franklin Templeton, another global leader in asset management, has launched the Franklin Ethereum ETF on the Chicago Board Options Exchange (CBOE) with the ticker EZET.

The fund charges a post-waiver fee of 0.19%, with fees waived to 0% until January 31, 2025, for the first $10 billion in fund assets. Coinbase is the custodian. The ETF has shown decent performance so far, with inflows totaling $23.3 million.

VanEck Ethereum ETF

VanEck, a $90 billion investment management firm, has launched the VanEck Ethereum ETF on the CBOE with the ticker ETHV. The fund charges a fee of 0.20%, but this fee is waived to 0% through July 22, 2025, or the first $1.5 billion in assets under management.

Gemini, another well-respected custodian in the crypto space, is used for this ETF. The ETF saw inflows of $7.6 million on its first, totaling $35.4 million.

Bitwise Ethereum ETF

Bitwise has launched the Bitwise Ethereum ETF on the NYSE with the ticker ETHW. This fund charges a low 0.20% management fee for the first $500 million in assets, with the fee set at 0% for the first six months.

In addition to the low fees, Bitwise has pledged to donate 10% of its profits to Ethereum developers. Coinbase is the custodian for this ETF.

The fund has performed strongly so far, with inflows of $204 million on the first day, totaling $265 million.

21Shares Core Ethereum ETF

The 21Shares Core Ethereum ETF trades on the CBOE with the ticker CETH and charges a fee of 0.21%. Coinbase is the custodian for this ETF. The fund saw inflows of $7.5 million on its first day, but since then, there have been no additional inflows.

Fidelity Ethereum Fund

Fidelity Investments, a major provider of workplace retirement plans, has launched the Fidelity Ethereum Fund on the CBOE under the ticker FETH. The fund has a fee of 0.25%, but until the end of this year, Fidelity will not charge any fee.

Fidelity is self-custodying its ETH, which might appeal to those who trust Fidelity’s long-standing reputation in the financial industry. The fund had strong inflows of $71.3 million on the first day, totaling $219 million.

iShare Ethereum Trust

BlackRock, the world’s largest asset manager with $10 trillion in assets under management, has launched the iShares Ethereum Trust ETF on NASDAQ with the ticker ETHA.

This fund carries a 0.25% sponsor fee, but with a one-year waiver, the fee is reduced to 0.12% for the first $2.5 billion in assets under management (AUM).

Coinbase is the custodian for this fund. It saw substantial inflows, with $266.5 million on the first day, totaling $442 million.

Invesco Galaxy Ethereum ETF

In partnership with Galaxy Asset Management, Invesco has launched the Invesco Galaxy Ethereum ETF on the CBOE with the ticker QETH. The fund charges a fee of 0.25%, with Coinbase as the custodian. The ETF saw inflows of $5.5 million on the first day, bringing its total inflow to $14.2 million.

Coinbase at an advantage

Coinbase is the custodian for most of the newly launched spot Ethereum ETFs, giving it a unique advantage in the market.

As a custodian, Coinbase securely stores the Ether backing these ETFs, a role that requires trust and reliability. This isn’t new territory for Coinbase, which also serves as the custodian for many spot Bitcoin ETFs.

From a financial perspective, custodial services provide a steady income stream for Coinbase. As the crypto market expands, the volume of assets they manage grows, strengthening Coinbase’s market position and enhancing its revenue base.

This growing optimism is reflected in Coinbase’s share price, which has nearly doubled in the last six months, placing the company in a comfortable position.

The road ahead for spot ETH ETFs

According to Eric Balchunas, a senior Bloomberg ETF analyst, the iShares Ethereum Trust (ETHA) had the highest trading volume on Day One compared to all new ETF launches in the past year, excluding Bitcoin ETFs.

I was curious how the Eth ETFs would rank in Day One volume vs all 600 or so new launches in the past 12mo but *excluding* the btc ETFs and $ETHA would be #1 (by a lot), $FETH #2, $ETHW #5 and $ETH 7th, and $ETHV in 13th spot. And $CETH, which was lowest among group, would still… pic.twitter.com/qXJFcuupi5

— Eric Balchunas (@EricBalchunas) July 23, 2024

ETHA was followed by Fidelity’s FETH in the second spot, Bitwise’s ETHW in the fifth, Grayscale’s ETH in the seventh, and VanEck’s ETHV in the thirteenth. Even the lowest among the group, 21Shares’s CETH, ranked in the top 10% of new launches.

Meanwhile, Matt Hougan, Chief Investment Officer at Bitwise, shared his thoughts on the future demand for these products. He believes that spot Ethereum exchange-traded products (ETPs) could bring in $15 billion in net flows within the first 18 months.

At this point, things seem promising for these ETFs. The early trading volumes and inflows show that investors are eager to invest in Ethereum through regulated products.

As more people understand and feel comfortable with Ethereum and other cryptos, the demand for these ETFs could likely grow even more.

However, nothing is guaranteed, and the tides can change at any moment, so trade and invest wisely. Never invest more than you can afford to lose.

Disclosure: This article does not represent investment advice. The content and materials featured on this page are for educational purposes only.

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