Ethereum ETFs made their debut on the bourses on Tuesday. On the first day of trading, most funds registered positive flows, with the aggregate volume surpassing $1 billion.
The net inflows stood at around $106.7 million. Data from SoSoValue pointed out that BlackRock’s iShares Ethereum Trust ETF [ETHA] registered the heftiest inflow at $266.5 million. Bitwise's fund [ETHW] was next in the queue flashing $204 million.
Grayscale’s Ethereum Trust [ETHE], on the other hand, bore the outflow torch. It single-handedly registered negative flows worth $484 million.
Ether ETFs’ launch day volume was roughly 1/5th of what Bitcoin ETFs registered on their launch day. To rewind, BTC funds registered a cumulative volume of $4.5 billion, out of which inflows represented around $600 million.
That being said, Bloomberg’s Senior ETF analyst pointed out that out of the 600 or so new ETF launches that have taken place over the past 12 months, barring the BTC funds, BlackRock’s ETHA grabbed the numero uno position in terms of day one volume, Fidelity’s FETH ranked two, while Bitwise’s ETHW grabbed the fifth position.
The Fee Dilemma
Shark Tank’s Kevin O’Leary has not been a fan of ETFs, but recently asserted that he sees them being successful. In an interview today he said,
“20% of the flow will be held in the ETF because so many advisers on their compliance back offices do not allow wallets of any kind. And so they can buy the ETF very much like a stock and show it directly to their clients on their statements. And, I think that will suck up a lot of demand. I think it'll be very successful.”
He, however, remains to be skeptical about the fee tangent and said that he would “never pay the fees.” ETFs provide investors exposure to ETH in the traditional finance [TradFi] manner, and according to O’Leary, the compliance and liquidity box will eventually be checked. He added,
“It's kind of ironic that we've gone through the whole crypto cowboy phase and we're right back to where crypto should be integrated into the world's global financial services system. It's been a remarkable ride.”
ETH as a SoV
ETH’s price did not outrightly react to the launch of the novel funds. Over the past day, the asset noted a 1.85% dip in price and continues to hover around the $3.5k threshold.
Nevertheless, it is interesting to note that Ethereum’s permanent holder inflows have registered a significant spike. CryptoQuant’s Ki Young Ju pointed out that the reading of this metric “reached an all-time high of 714K ETH yesterday, worth $2.4B.”
The inflows include transfers registered by custodial wallets but do not take into account exchanges and mining pool addresses.
To break it down further, the permanent holder inflow serves as a proxy to the overall health of ETH as an investment asset or store of value. An uptick typically connotes a rise in demand by owners who primarily accumulate ETH over time and seldom engage in spending transactions.
Thus, the current state of conviction points out that a long-term holding strategy is in play by the diamond-hand holders, further reinforcing ETH as an appealing investment from the fundamental standpoint.
