Ethereum ETFs Fail to Match BITO’s Blockbuster Launch

Six ether future funds brought to market last week have less than $20 million in assets combined.

Since their launch on Oct. 2, the first six exchange-traded funds that hold ether futures have failed to replicate the success of the first bitcoin futures ETF, the ProShares Bitcoin Strategy ETF (BITO). 

Here are the six:

• VanEck Ethereum Strategy ETF (EFUT)
• Bitwise Ethereum Strategy ETF (AETH)
• Bitwise Bitcoin and Ether Equal Weight Strategy ETF (BTOP)
• ProShares Ether Strategy ETF (EETH)
• ProShares Bitcoin & Ether Equal Weight Strategy ETF (BETE) 
• Bitcoin & Ether Market Cap Weight Strategy ETF (BETH).  

The ETFs hold futures based on ether, the cryptocurrency based on the Ethereum blockchain. Three of the funds—BTOP, BETE and BETH—also hold bitcoin futures.  

The six funds have less than $20 million in assets under management combined, with the largest, EFUT, holding $7.8 million. BITO broke $1 billion in assets after its first few days of trading, according to data from Bloomberg.  

The cool reception from investors is likely because bitcoin is a much larger cryptocurrency than ether, conditions in the crypto market are a lot different than when BITO launched, and investors may be waiting for a spot cryptocurrency ETF to be approved. 

Crypto Winter Cools Sentiment 

“It is a different environment for crypto, broadly, now versus 2021 when the bitcoin futures ETFs were launched,” said a representative from VanEck. 

This sentiment was echoed by financial advisor and author Ric Edelman, who said that while BITO launched in a crypto bull market, the six new ETFs launched nearly two years into a “crypto winter,” the term used in the crypto community to describe down markets for the asset class. 

First-Mover Advantage 

BITO likely benefited from not only being the first ever bitcoin ETF, but also from being the first one that gave exposure to any cryptocurrency futures. That gave it a substantial first-mover advantage. That aspect is likely a factor in the Securities and Exchange Commission simultaneously approving multiple ether ETFs at once, to ensure its approval doesn’t give an unfair advantage to any one individual firm. 

Ark Invest CEO Cathy Wood has said first-mover concerns would likely be a factor in SEC approval of spot bitcoin ETFs.  

Waiting for Spot Bitcoin ETF 

“Many investors are impatiently waiting for spot bitcoin ETFs to come to market. With so much of the focus on the spot ETF approval, it’s possible that we’re seeing a holdout until we get spot funds live,” said a representative from Valkyrie Investments, which manages the Valkyrie Bitcoin and Ether Strategy ETF (BTF), a crypto futures fund that launched in 2021 but that was changed to include ether futures last week. 

Ethereum has a market cap roughly one-third that of bitcoin, a big difference, but not as much as the difference between BITO's assets and the assets of the newly launched ether ETFs. 

Simeon Hyman, global investment strategist at ProShares, said in an interview that he expects ether futures ETFs to ultimately end up with a similar proportion to those in bitcoin futures ETFs. 

Contact Gabe Alpert at [email protected]