Here's the side by side of the first day of trading for #Ethereum ETFs vs #Bitcoin ETFs.

The major difference to me is the comparatively massive $ETHE outflow. I think $GBTC didn't have that on day 1 because it was still at a meaningful discount when it launched pic.twitter.com/w0nkJDzjX3

— James Seyffart (@JSeyff) July 24, 2024

The ETFs now have $10.2 billion in assets, and volumes on the first day of trading were over $1.1 billion. Grayscale’s ETHE currently leads the race in terms of volume, at $469.7 million. The issuer has a head start on volume, because it transformed its Ethereum closed-end fund, first launched in 2017, into an ETF. The issuers which reported the greatest inflows—respectively—are BlackRock with $266 million, Bitwise with $204 million and Fidelity with $71 million.

Overall, the funds saw net inflows of $107 million, which accounts for the $484 million outflows from Grayscale’s Ethereum Trust, ETHE, according to Bloomberg data.

So far, the ETFs have left no mark on the price of Ethereum, which is down 0.8% since trading began on Tuesday morning, according to CoinGecko data. Since July 7, however, the token is up 17%. While anticipation of the SEC approval may be baked into this price, it’s more likely that Donald Trump’s increasing electoral chances over recent weeks, is underlying this growth.

Considering that its market capitalization is about one-third of Bitcoin’s, it is no surprise the Ethereum ETF inflows were smaller than its bigger rival. But, even taking the smaller market cap into consideration, the outflows and volume from launch day still pale compare to Bitcoin’s, with the former at 16% and the latter at 23%, of the numbers seen for the first batch of ETFs.

One reason for why is that the SEC banned issuers from allowing investors to stake the Ether in the funds. Staking involves locking Ether tokens into the blockchain to help validate transactions and earn additional yields, part of a proof-of-stake mechanism. The latest annualized reward rate is 3.33%, according to Staking Rewards. Without this feature, more crypto-native investors may purchase Ether directly via a wallet, than through a fund.

‘Definitely surprised’

But there’s another reason why outflows may seem on the small side: Grayscale’s $484 million outflows. “I was definitely surprised by how much money came out of ETHE on day one,” Seyffart says.

On the Bitcoin ETFs’ first day of trading in January, Grayscale’s Bitcoin Trust, or GBTC, saw less than $100 million of outflows. After years of their funds being locked-in to the trust, on January 11, investors were finally freed up to liquidate their shares in GBTC. Starting in 2013 as a closed-end trust fund, GBTC was the only real option to trade Bitcoin on the stock market, for which investors paid a premium. But starting from February 2021, it had traded at a deep discount, hitting record lows of almost 50% in December 2022. Investors had been locked into the trust, while they watched GBTC’s discount on the underlying asset, Bitcoin, widen.

ETHE’s outflows stem from Grayscale’s 2.5% fee, compared to the competing funds charging investors 0.25% or less. One reason why ETHE’s outflows outsized GBTC could be because on the latter’s launch day, the fund was trading at a steep discount compared to the price of Bitcoin.

Nonetheless, Seyffart believes the crypto industry should claim the initial data as a success. For instance, the smallest ETF, 21 Shares’ Core Ethereum ETF, which reported $8.7 million inflows, would normally be considered a “very successful launch day by any standard ETF’s first day of trading,” says Seyffart. On top of this, the volume numbers were “very strong,” he added.