BlackRock battles Bitwise as new Ethereum ETFs struggle to gain traction

The launch of new Ethereum exchange-traded funds (ETFs) encountered significant outflows, as almost $750 million exited the ETFs in four of five recorded trading days.

However, on July 30, Ether (ETH $3,321) ETF net inflows across all nine spot Ether ETFs totaled $33.6 million, marking the first positive daily flow since launch day.

According to Nansen data, this trend facing Ether ETFs is substantially different from the debut of the Bitcoin (BTC) ETFs, revealing a distinct regulatory difference.

Nansen told Cointelegraph that on July 30, Bitwise surpassed BlackRock in trading volume as Bitwise waived its 0.2% fee to “boost inflows” for the first six months of its ETF launch.

At the time of publication on July 31, BlackRock has taken back its position in trading volume while accounting for 5.59% of assets under management (AUM) per Nansen data.

Nansen data recording Ether ETF providers and AUM. Source: Nansen

Regulatory considerations

The United States Securities and Exchange Commission (SEC) has previously expressed concern for the staking elements behind Ethereum’s proof-of-stake (PoS) consensus mechanism.

Due to the complexity of Ethereum as an investment and the SEC’s decision against allowing staking rewards, Consensys was prompted to address the matter on March 31.

Consensys explained that the PoS mechanism “meets and even exceeds the security of Bitcoin’s proof-of-work (PoW),” which the securities regulator has already approved for trading.

BlackRock stance on future crypto ETFs

On July 25, the asset manager BlackRock stated that the firm sees “very little interest” among its clientele in crypto for ETFs beyond BTC and ETH products.

At the Bitcoin 2024 conference in Nashville, Tennessee, the firm’s head of digital assets, Robert Mitchnick, emphasized that the firm’s clients’ interest was “overwhelmingly” geared toward BTC.

He explained that this interest was also “somewhat” present for ETH, but the interest quickly tapered off beyond those two products.

Bitwise expects a bigger impact from Ether ETFs

On July 18, Bitwise chief investment officer Matt Hougan explained that US spot Ether ETFs could have a larger price impact on the asset than BTC ETFs.

Hougan detailed that the first few weeks could be “choppy” as Grayscale Ethereum Trust (ETHE) converted “to an ETP,” but he was “confident” that new highs would be in by the end of 2024.

The chief investment officer’s rationale was based on ETH’s widespread use, BTC miners forced sell-offs, and approximately one-third of all ETH (28%) being locked away through staking.