Bitwise CEO Hunter Horsley explained why he believes the recently launched Ethereum spot exchange-traded fund (ETF) has significantly lower trading volume and inflows compared to Bitcoin.
In an October 21 post on
According to SoSoValue data, BlackRock’s ETHA recorded net inflows of $1.45 billion, while Fidelity’s FETH and Bitwise’s ETHW saw inflows of $498 million and $321 million, respectively.
Overall, the data shows that the Ethereum ETF experienced negative flows of approximately $500 million due to significant outflows from the Grayscale Ethereum Trust and tepid demand for other ETH funds.
Why Ethereum ETF Is Struggling
Horsley highlighted some of the reasons behind the slow start of the Ethereum ETF, explaining that one of the key factors affecting the product is the timing of its launch.
According to him, the Ethereum ETF was launched in the summer, a traditionally slow investment period when investors monitor market activity rather than launching new projects.
He added that the Ethereum ETF debuted in a relatively flat market, while the Bitcoin ETF emerged during a bull market and received more attention and investment. Horsley pointed out that when the Ethereum ETF was launched, many investors were still focused on Bitcoin, making it difficult for Ethereum to gain traction.
He explained:
“Many traditional investors have needed, and will continue to need, some time to figure out how to integrate Bitcoin following the launch of ETPs. “Ethereum arrived before that problem was solved, so it was difficult to divert attention.”
What about staking?
Horsley also cited concerns about whether the lack of a staking feature would have a significant impact on the Ethereum ETF.
The Bitwise CEO stated that he does not believe the lack of staking returns is a significant issue, noting that most ETH holders are not currently staking their assets.
However, Horsley highlighted the success of Bitwise’s European franchise, which offers a fund (ET32) that provides exposure to Ethereum while earning staking rewards. He said the fund had been growing “excellently” and that similar features would benefit US-based funds.
Staking is an important element of Ethereum’s Proof of Stake (PoS) system, where users lock up Ethereum to verify transactions and earn rewards. However, the U.S. Securities and Exchange Commission (SEC) has expressed concerns that staking services may constitute unregistered securities offerings and has taken legal action against cryptocurrency platforms such as Kraken.
ETF issuers have understandably responded to these legal risks by excluding staking from their funds.
Despite these challenges, Horsley emphasized that it is too early to judge the long-term potential of Ethereum ETPs. He believes that “the story of Ethereum ETPs has just begun.”