The surprising success of Bitcoin exchange-traded funds (ETFs) earlier this year Ethereum Ethereum
+0.11%
ETF — Launching today – in an interesting location.
The Bitcoin ETF was widely considered the most successful ETF launch of all time, both in terms of volume and flow on the first day, and in terms of sustained high metrics in the months that followed. Now, the Ethereum ETF is likely to capture only a fraction of the flow that other ETFs have seen, but it could still be one of the most notable ETF launches of all time.
“A typical ETF, if you’re lucky, will trade a million dollars on the first day. That’s a typical successful launch for an ETF,” said Eric Balchunas, Bloomberg’s chief ETF analyst. “These are going to blow it.”
Balchunas argued that the launch of a Bitcoin ETF is like an anomaly in physics. It is not surprising that the launch of an Ethereum ETF would be disappointing compared to such an anomaly. However, he argued that even if it does not reach the same levels as the Bitcoin ETF, it would be a huge success story in its own right.
“I don’t think you’d ever compare yourself to Bill Gates, like a billionaire would feel discouraged because Bill Gates has $140 billion,” Balchunas said.
When the Bitcoin ETF launched, it had $300 billion in cumulative volume in its first six months, and peaked at $61.5 billion in AUM (including Grayscale, which had $28 billion in AUM on its first day). Balchunas said that if they’re lucky, an Ethereum ETF could see 20% of the volume and assets that the Bitcoin ETF saw.
Balchunas also mentioned that there is an interesting subplot to the impending launch: Grayscale is offering an Ethereum Mini Trust, which theoretically should see some demand due to its low cost. But even if it doesn’t, it could be beneficial.
“It will tell you if there is any reputational damage to the Grayscale brand,” Balchunas said. “If there is no new flow, you will know that the brand is damaged. You should take the asset because the fees are the lowest.”
Like Bitcoin ETFs, Ethereum ETFs offer competitive fee structures, with many offering discounts at the outset. Even if these ETFs don’t reach the same level as Bitcoin ETFs, they are still worth competing with.
Disclaimer: The Block is an independent media outlet providing news, research and data. As of November 2023, Foresight Ventures is the largest investor in The Block. Foresight Ventures invests in other companies in the cryptocurrency space. Cryptocurrency exchange Bitget is an anchor LP of Foresight Ventures. The Block continues to operate independently to provide objective, influential and timely information on the cryptocurrency industry. Current financial disclosures are as follows:
© 2023 The Block. All rights reserved. This article is provided for informational purposes only. It is not provided or intended to be legal, tax, investment, financial or other advice.