Ethereum ETFs Massively Outpace Bitcoin Funds—Why ETH Demand Is Surging
In brief
- Spot Ethereum ETFs generated over $1.8 billion in investments this week.
- The nine funds outpaced their Bitcoin counterparts, which added just $70 million.
- Interest in Ethereum has risen with the passage of a stablecoin bill and rise of Ethereum treasury companies.
For a week, at least, spot Ethereum exchange-traded funds outpaced their Bitcoin counterparts.
The nine ETFs tracking ETH generated more than $1.8 billion in net inflows this week, continuing a 16-day positive streak, according to U.K. asset manager Farside Investors, as interest in the second-largest cryptocurrency mushrooms.
The 12 Bitcoin funds added just $70 million in assets over the same period, with three of the five days showing net outflows for the funds. Bitcoin has historically been on top, but this week, Ethereum dominated crypto ETF flows.
"Many [investors] own Bitcoin ETFs and are increasingly interested in diversifying," Ric Edelman, founder of the Digital Assets Council of Financial Professionals, a trade group, told Decrypt. "Ethereum is the second-largest digital asset, and the only other one available in [spot] ETF format—making it very easy to choose it in one’s effort to improve their portfolio’s diversification."
ETH ETFs' spike comes amid a price surge intertwined with the growing popularity of these funds and the rise of Ethereum treasuries. Those trends accelerated as passage of the GENIUS Act stablecoin bill neared. The legislation, which U.S. President Donald Trump signed into law last week, is expected to benefit Ethereum, the dominant platform for stablecoin transactions.
Ethereum was recently trading at about $3,745, down roughly 3% from its seven-month high set earlier this week but up more than 50% over the past month.
"Ethereum has been skyrocketing in price recently, after an extended period of underperformance compared to Bitcoin, and investors are notorious for buying assets after they’ve gone up in value and selling them after they’ve fallen—the exact opposite of what you’re supposed to do," Edelman said.
BlackRock's iShares Ethereum Trust (ETHA) led this week's charge, adding $1.29 billion in investments. On Wednesday, ETHA became the third-fastest fund in the ETF industry's 32-year history to reach $10 billion in assets under management (AUM)—251 days, according to Bloomberg data. The Fidelity Ethereum Fund (FETH) netted over $380 million in assets and has $2.3 billion in AUM, according to TradingView.
In an interview with Decrypt, Juan Leon, senior investment strategist at ETF issuer Bitwise Asset Management, said that the Ethereum funds' performance this week caps a month of gains relative to BTC ETFs.
"The ETF inflows have been closing the gap to Bitcoin significantly," Leon said. "If you look at the first week in July for the two assets where the difference in market cap is 5x, there was only a 3.5x gap between the inflows. And then the following week it narrowed further. And last week they were almost on par."
Leon believes that the ETH funds will continue their momentum at least short-term, although he expects investors to return to Bitcoin ETFs in greater numbers in the second half of the year when major "wirehouse platforms," including Merrill Lynch and Wells Fargo, begin offering the latter as trading options before "greenlighting" ETH ETFs.
"That'll drive renewed flows into Bitcoin ETFs," he said. "So I'm not sure that ETH ETFs flows can continue to outperform Bitcoin's for the remainder of the year. But right now, we seem to be at least in a short-term inflection point, and irrespective of the absolute numbers, from the point of view of how big one asset is in relation to the other, ETH will continue to punch above its weight over the coming weeks and months."
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