Key facts:
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Ethereum ETFs have seen lower trading volume than Bitcoin ETFs.
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Staking exclusion limits demand for Ethereum ETFs, says CoinMetrics.
Since their launch, Ether (ETH) ETFs, the Cryptocurrency of Ethereum, have shown significantly lower trading volume compared to Bitcoin (BTC)-based ETFs.
This difference has become increasingly evident. Looking at the volume and market cap ratios between ETH and BTC on centralized exchanges (CEX), as seen in the following chart.
Volume ratios between ETH and BTC ETFs. Source: Galaxy Digital.
One of the key factors behind this disparity, according to pointed out Galaxy Digital, an asset management company, is the leading trading desk They do not yet offer leverage (or margin) for Ethereum ETFs.
Leverage allows investors to trade with a larger amount of capital than they actually have, which can significantly increase trading volume.
The absence of this option for the ETF of ether limits its attractiveness and therefore reduces its trading volume compared to bitcoin ETFsGalaxy highlights.
To illustrate the impact of this lack of margin, it is useful to compare the performance of the ether and bitcoin ETFs over the first 25 days since their launch, as seen in the chart below.
This comparison reveals that the ratio of trading volume of Ethereum ETFs to Bitcoin ETFs has been continuously declining. While interest and activity in Ethereum ETFs have been steadily declining, bitcoin remain high, Ethereum ETF trading volume continues to lag, reflecting a downward trend.
bitcoin ETFs vs. Ethereum ETF
The differences between these financial instruments are also evident in the data on capital inflows and outflows.
Since they began trading on the US stock exchange last July, ether ETFs They have recorded 19 days of outflows and only 9 days of capital inflowsresulting in negative net flows of $477 million, as seen below.
The red lines represent capital outflows and the green lines represent capital inflows. Source: SosoValue.
Much of these capital outflows have been led by the Grayscale Ethereum Trust (ETHE), which has seen withdrawals totaling $2.5 billion, and, since it began trading, has only had one day without outflows, but has also experienced no capital inflows, as can be seen in the following chart. SosoValue.
Performance of the Ethereum ETF managed by Grayscale. Source: SosoValue.
In contrast, bitcoin ETFs have been highly successful, Raising $17.6 billion in net flows since its launch in January of this year until today.
Matt Hougan, director of digital assets at Bitwise, mentioned that institutional investors are adopting bitcoin ETFs faster than any other ETF in history.
Despite these differences, Ethereum ETFs hold a good position against other funds. Of the nearly 400 new exchange-traded funds launched this year, 13 of the top 25 are related to bitcoin and Ethereum, indicates Nate Geraci, president of the ETF Store company.
This shows that half of the most popular ETFs this year are investing in these two digital assets, although it is notable that the 4 largest ETFs in this group are exclusively focused on BTC, reflecting a clear preference of investors for the first digital currency.
Expectations for Ethereum ETFs may change in the future
While the market was expecting better performance from ether funds, it is important to remember that they are barely 2 months old.
CoinMetrics, an on-chain analytics firm, points out that the approval of the first Ethereum ETFs in the United States marked a significant milestone in the history of cryptocurrencies.
However, he also warns that One of the factors that could be holding back better performance of Ethereum ETFs is the exclusion of staking.
Staking is the act of leaving cryptocurrencies deposited for a certain period in a smart contract in exchange for rewards. As indicated by the Cryptopedia According to CriptoNoticias, this activity can be carried out on both Ethereum and other networks that use the proof-of-stake (PoS) consensus algorithm.
The lack of staking in ETFs could limit its demand in the short term, as some investors may prefer platforms that do allow it. to maximize your profits.
Although ETFs Ethereum While the crypto market faces significant challenges, these funds represent a major step for digital assets and, according to CoinMetrics’ expectations, could help Ethereum become an increasingly relevant catalyst in the global financial landscape.
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