BlackRock Exec Explains Its Ethereum ETF Product’s Underperformance

As a seasoned crypto investor with years of experience under my belt, I must admit that the performance of BlackRock’s Ethereum ETF (ETHA) has been less than impressive compared to its Bitcoin counterpart, iShares Bitcoin Trust (IBIT). While it’s encouraging to see ETHA surpass $1 billion in net asset value, it’s hard not to compare it to IBIT’s meteoric rise within days of launch.


Over the past two months following its launch, the iShares Ethereum Trust (ETHA) from BlackRock Inc (NYSE: BLK) has experienced some investments, yet it pales in comparison to the impressive performance of the firm’s iShares Bitcoin Trust (IBIT) during its early stages. There’s a significant disparity between the trading volumes and inflows for both products. Robert Mitchnick, BlackRock’s head of digital assets, anticipates that the unfavorable narrative won’t change significantly in the near future.

BlackRock Exec Says Ethereum’s Investment Story Is Cumbersome

The BlackRock executive attended the Messari Mainnet conference in New York and spoke about ETHA’s performance. He described it as underwhelming compared to IBIT but acknowledged its milestone against ETFs overall. Noteworthy, the fund recently surpassed $1 billion in net asset value, becoming the second spot Ethereum ETF to achieve this after Grayscale’s Ethereum Mini Trust.

Rarely does a new Exchange-Traded Fund (ETF) reach a billion dollars in assets under management (AUM) within just seven weeks, but that’s what ETHA managed to do. Generally speaking, it typically takes several years – if ever – for a freshly launched ETF to accumulate a billion dollars.

When BlackRock debuted its Bitcoin ETF for direct trading back in January, it garnered considerable attention from institutional investors and achieved substantial success. In just 15 days since its introduction, IBIT amassed an impressive $2 billion in assets under management (AUM). Over the subsequent nine months, this value has consistently increased and is now standing at a staggering $24 billion.

Conversely, it required ETHA a full month to hit $1 billion, and it has since remained fairly steady at that point.

The BlackRock Executive explains that the complexity surrounding Ethereum’s (ETH) investment story and narrative makes it challenging for many investors. Recognizing the constraints of their ETHA fund, BlackRock remains dedicated to educating their clients as they navigate this learning process together.

Consequently, we can’t assume that the Ethereum fund will match the Bitcoin fund’s performance in terms of inflows and Assets Under Management (AUM).

“But it’s still a pretty good start,” Mitchnick stated.

Spot Ethereum ETFs Sees a Mix of Flows

The performance of U.S. ETFs focused on Ethereum, such as the BlackRock Ethereum ETF, is not meeting expectations. On September 23, these funds experienced over $79 million in withdrawals, indicating a waning interest from institutional investors. According to Farside Investors, the Grayscale Ethereum ETF (ETHE) was responsible for the majority of these outflows, with approximately $80.6 million being withdrawn.

Meanwhile, Bitwise’s ETHW experienced inflows amounting to $1.3 million. On the other hand, Ethereum ETFs saw no inflows, and this pattern has persisted for several days. The decreased interest in Ethereum ETFs is partially due to the fact that its underlying cryptocurrency does not hold the “digital gold” status that Bitcoin does.

Instead, it’s more probable that investors will choose to invest in Bitcoin-related financial products over those based on Ethereum.

Last week, despite a general decrease in enthusiasm, Ethereum Exchange Traded Funds (ETFs) managed to attract investments totaling approximately $87 million worldwide. Remarkably, US-based Ethereum spot ETFs accounted for the majority of these inflows with an impressive $85 million. This was the largest net weekly investment these funds have received since early August.

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2024-10-01 11:51