Institutional ethereum investment via ETFs reached a historic — and dismal — milestone yesterday when for an entire day on Wall Street, zero net new US dollars flowed into spot ether ETFs.
Known as ‘daily total net flow’ or simply ‘flows’ in crypto parlance, this metric sums the total amount of money invested into spot ether ETFs (inflows) against the total amount of money withdrawn (outflows) on a daily basis.
The intention of the metric is to communicate how much effect the spot ether ETFs — distinct from other investment vehicles like spot or derivative purchases — contribute to ether’s price on a day-to-day basis.
Calculations are typically in US dollars and take into account all purchase and sale transactions across the nine spot ether ETFs listed on US stock exchanges by sponsors BlackRock, Fidelity, Bitwise, 21Shares, Franklin, Invesco/Galaxy, VanEck, and Grayscale’s two spot ETFs.
Ether ETF flows have disappointed everyone
Monday’s figure of $0 contrasts starkly with predictions from bullish investors who heralded spot ether ETFs as the advent of institutional adoption. Market predictions included all-time highs of up to $15,000 per ETH. Today, ETH is trading around $2,400 — half of its all-time high.
In the first quarter following the launch of bitcoin’s spot ETFs, bitcoin enjoyed over $12 billion of inflows. Ether, disappointingly, has actually posted net outflows since its spot ETFs debuted.
Read more: Ethereum beats bitcoin first-day spot ETF inflows
Indeed, because Wall Street entities had seeded the nine spot ether ETFs with $10.2 billion of capital for their debut — most of which came from Grayscale’s ether trust — there was some money available to withdraw from these funds.
Taking that opportunity, investors have withdrawn capital from spot ether ETFs on a net basis since their US listings. Specifically, spot ether ETFs have shed $548 million in net outflows since July 23.
There are many reasons for investors making decisions about capital reallocation away from spot ether ETFs. One salient contributor to poor performance — in addition to ether underperforming bitcoin — might be the lack of yield in spot ether ETFs.
Large holders of ETH may earn 3.3% in native yield by participating in Ethereum’s proof-of-stake while most ether ETFs, in contrast, do not pay any yield and actually charge a management fee.
