There is much excitement in the cryptocurrency community with the launching of Ether ETFs (Exchange-Traded Funds). With over 1 billion dollars worth of trade on its first day, this cannot be easily overlooked. Yet still I am not fully convinced that the exuberance surrounding these ETFs is valid as yet.
On one side, the 106.78 million dollar net inflow on the first day sounds pretty cool to me. It shows that investors are keen on being exposed to Ether through these new investment vehicles. This would possibly pave the way for more retail and institutional investors to enter the Ether market thus driving its growth and adoption.
However, I can’t help but compare these numbers to those from the Bitcoin ETF launch earlier this year. The Bitcoin ETFs had a trading volume figure worth $4.5 billion and a net inflow of $600 million during their inception day. Despite Ether being the second largest cryptocurrency by market capitalization, such gaps in figures come with an impression that there could be lower-than-expected passion towards Ether ETFs.
One of the reasons that could be making this flow to be low is the absence of staking Ether ETFs.
Staking allows holders to earn a passive income by validating transactions on the Ethereum network, which may interest some investors.
Such an inability might make Ether ETFs less appealing to certain investors.
Additionally, the Grayscale Ethereum Trust (ETHE) accounted for a significant amount,about 484 million dollars. This shows that traders are moving their assets from the trust and into these new ETFs in search of relatively lower costs and improved liquidity.
For now, I still think it’s too early to call whether or not these Ether ETFs have been successful so far. The market will change continuously and investor sentiment might shift once more data is available. I am paying close attention to what is happening while recognizing that the crypto market is prone to volatility and unpredictability as it stands today.