Bitwise CEO Hunter Horsley has explained why he believes recently launched Ethereum spot exchange-traded funds (ETFs) have seen significantly lower trading volumes and inflows than their Bitcoin counterparts.
In an October 21 article on .
SoSoValue data shows that BlackRock’s ETHA attracted $1.45 billion in net inflows, while Fidelity’s FETH and Bitwise’s ETHW saw inflows of $498 million and $321 million , respectively.
Overall, the data shows that Ethereum ETFs saw negative flows of around $500 million thanks to large outflows from Grayscale Ethereum Trust and weak demand for other ETH funds.
Why Ethereum ETFs are in trouble
Horsley highlighted several reasons behind the slow start of Ethereum ETFs, explaining that one of the key factors that impacted the products was the timing of their launch.
According to him, Ethereum ETFs were launched over the summer, a traditionally slow investment period in which investors monitor market activity rather than jumping into new projects.
He added that Ethereum ETFs debuted in a relatively flat market, while Bitcoin ETFs entered the scene during a bull market, which attracted more attention and investment. Horsley noted that many investors were still focused on Bitcoin when Ethereum ETFs launched, making it difficult for Ethereum to attract attention.
He explained:
“For many traditional investors, some time has been and continues to be required to understand how to integrate Bitcoin after the launch of ETPs. Since Ethereum arrived before this problem was resolved, it was difficult to pay attention to it.
What about staking?
Horsley also addressed concerns about whether the lack of staking functionality had a significant impact on Ethereum ETFs.
The Bitwise CEO said he does not think the lack of staking returns is a significant issue, noting that most ETH holders are not currently staking their assets.
However, Horsley highlighted the success of Bitwise’s European franchise, which offers a fund (ET32) providing exposure to Ethereum while capturing staking rewards. He said this fund is “seeing good growth” and that a similar feature would benefit US-based funds.
Staking is an essential part of Ethereum’s proof-of-stake (PoS) system, in which users lock up their Ethereum to validate transactions and earn rewards. However, the United States Securities and Exchange Commission (SEC) has expressed concerns that staking services could be considered unregistered securities offerings and has taken legal action against crypto platforms like Kraken.
Unsurprisingly, ETF issuers have excluded staking from their funds in response to these legal risks.
Despite these challenges, Horsley stressed that it is too early to judge the long-term potential of Ethereum ETPs. He believes that “the Ethereum ETP story is only just beginning.”
