Ethereum ETFs falter as investors shift focus to Bitcoin
Investors shift focus to Bitcoin ETFs
Ethereum-focused exchange-traded funds (ETFs) are facing sustained investor outflows, marking their longest losing streak to date. Over the past 12 trading days, spot Ethereum ETFs have seen a total of $370 million in redemptions.
The decline comes as Ethereum’s price has dropped from $2,200 on March 5 to around $1,950 today, according to Decrypt.
Two of the largest funds—the iShares Ethereum Trust and the Grayscale Ethereum Trust—accounted for a combined $252 million of the total outflows. Meanwhile, spot Bitcoin ETFs have rebounded, attracting $660 million in new inflows this week alone, signaling renewed institutional confidence in the top cryptocurrency.
Lack of staking dampens Ethereum ETF appeal
Analysts attribute Ethereum’s ETF struggles in part to the funds’ inability to offer staking—a key feature of the Ethereum network that allows investors to earn yield by locking up their assets to validate transactions.
“A staking yield is a meaningful part of how you can generate investment return in this space,” said Robert Mitchnick, head of digital assets at BlackRock, during the Digital Asset Summit in New York.
Several issuers, including Bitwise, Grayscale, and Fidelity, have submitted filings to allow staking within their Ethereum ETFs. The SEC has acknowledged the proposals and is reviewing potential risks related to liquidity and staking mechanisms.
Despite the recent downturn, spot Ethereum ETFs have brought in $2.45 billion in net inflows since launching last July. But with staked Ethereum now totaling 33.8 million ETH—up from 33.6 million on March 5—investors appear to be increasingly favoring direct staking over passive ETF exposure.
Bitcoin, by contrast, continues to command the lion’s share of institutional interest, with more than $35 billion in ETF inflows to date.
Meanwhile, Ethereum validators have recently signaled majority approval for increasing the network’s gas limit, pushing it past 34 million for the first time since 2021.
