Ethereum ETFs hit US$1 billion volume in first day
Demand for ETH ETFs could pave way for more crypto ETFs in future.
9 Ethereum ETFs (exchange-traded funds) began trading today in the US, hitting US$1 billion in total volume, roughly a quarter that achieved by January's spot Bitcoin ETFs debut.
The ETFs, launched by investment firms including Fidelity, BlackRock, Invesco and others, are the first such funds to launch in the US and offer investors a way to get direct exposure to the performance of Ethereum (ETH), the second-largest cryptocurrency.
How did the ETFs perform?
In the first 15 minutes of trading, the ETFs managed US$120 million in total volume, according to Bloomberg ETF analyst Eric Balchunas, and hit US$1 billion for the day.
Based on current volume, the first day performance of the Ethereum ETFs dwarfs any other ETF launched within the last 12 months, excluding the spot Bitcoin ETFs in January.
In fact, the iShares and Fidelity ETFs would be first and second for opening day volume of any ETF launched in the last year (again excluding the Bitcoin ETFs from January).
The clear demand for Ethereum suggests there's a broader appetite for cryptocurrencies beyond Bitcoin, and opens the door for other crypto ETFs in future.
"Today's launch not only reinforces Ethereum's legitimacy as an asset but also boosts the status, accessibility, and growth potential of the broader digital asset ecosystem," said Ben Rose, general manager for Binance Australia and New Zealand.
How did the crypto market react?
Despite the relative success of the ETH ETFs, the crypto markets tell a slightly different story.
Bitcoin saw a 2.50% drop, while the price of Ethereum has barely moved since the ETFs began trading.
Part of this may be a simple "buy the rumour, sell the news" phenomenon, where investors attempt to preempt a major event by investing in the lead up, before selling once the event arrives.
But another factor may be the spectre of the Grayscale Ethereum Trust (ETHE), an ETH fund that has been running since 2017.
The Grayscale fund has recorded net outflows of almost US$500 million today as investors look to move their funds to the new ETH ETFs, which offer lower fees.
But this means all the ETH leaving the Grayscale fund will need to be sold, flooding the market with additional supply. While it's still early days, this may at least explain why the price of Ethereum has seemingly struggled so far today.
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