According to CoinShares’ Head of Research, James Butterfill, BlackRock surpassed Grayscale in assets under management (AUM) for publicly-listed crypto products faster than anticipated. This shift underscores the influence of established ETF providers and their rapid market dominance.

Eight months after the introduction of spot Bitcoin ETFs, BlackRock’s spot Ethereum and Bitcoin ETFs have now amassed $22 billion, surpassing Grayscale’s $20.7 billion, which includes funds for Solana and Chainlink. The launch of spot Ethereum ETFs in July accelerated this change, with Grayscale’s Ethereum Trust (ETHE) facing persistent outflows.

Butterfill points to $2.3 billion in outflows from ETHE as a key factor in this transition. Meanwhile, BlackRock has seen significant inflows, with $966 million netted for its spot Ethereum ETF. The competition between Grayscale and BlackRock narrows, with a $1.5 billion gap in their Bitcoin ETFs. Grayscale’s Bitcoin Trust (GBTC) leads with $18.7 billion in AUM, but ongoing outflows have allowed BlackRock’s iShares Bitcoin Trust (IBIT) to close in with $17.2 billion.

Grayscale has also invested in advertising, using airports and New York City subways to promote its products. However, BlackRock’s Ethereum product, with an expense ratio of 0.25%, competes with offerings from Fidelity and Invesco. In contrast, Grayscale’s spot Ethereum ETF has a higher expense ratio of 2.5%, although its Ethereum Mini Trust offers a more competitive 0.15%.

Butterfill believes Grayscale faces challenges in reclaiming its leading position, as investors are drawn to cheaper alternatives. "Keeping fees high will deter many investors," he noted.