BlackRock's Ethereum ETF Lags Behind Its Bitcoin ETF—Here's Why

BlackRock‘s recently launched Ethereum ETF ETHA is seeing significantly lower volume and inflows compared to its Bitcoin counterpart. The company’s head of digital assets, Robert Mitchnick, doesn't anticipate that gap closing anytime soon.

What Happened: Speaking at the Messari Mainnet conference in New York, Mitchnick acknowledged that ETHA’s performance has been "underwhelming" relative to BlackRock's Bitcoin ETF, Fortune reported.

However, he urged investors to maintain perspective.

"It's very rare that you see an ETF get to a billion AUM in seven weeks, as ETHA did," Mitchnick noted. "In most cases, it takes multiple years to never for a new ETF to get to a billion."

While the Bitcoin ETF skyrocketed to $2 billion in assets under management (AUM) within 15 days of its launch in January, ETHA took a more modest path, hitting around $1 billion within a month of its debut in July.

Today, BlackRock's Bitcoin ETF, known as IBIT, boasts $24 billion in AUM, while ETHA lingers at roughly $1 billion.

Mitchnick attributed the difference to the varying investment narratives between Bitcoin and Ethereum.

"With ETH, I think the investment story and narrative is a bit less easy for a lot of investors to digest, so that's a big part of why we're so committed to the education journey that we're on with a lot of our clients," he explained.

Despite the slower uptake, he remarked that the ETF’s start is still "pretty good," even if it will never quite match Bitcoin's volume or assets under management.

Benzinga future of digital assets conference

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The uneven performance between the two ETFs reflects broader trends in the cryptocurrency ETF space.

When BlackRock launched its spot Bitcoin ETF in January, it joined ten other firms in a historic move by the U.S. Securities and Exchange Commission (SEC) to approve multiple crypto ETFs at once, opening the doors for mainstream investors to enter the market.

Since their inception, spot Bitcoin ETFs have amassed $61 billion in cumulative new assets, according to SoSoValue data.

Recently, spot Bitcoin ETFs experienced a notable surge, pulling in $365 million in just one day, with companies like BlackRock, Fidelity and ARK Invest leading the way.

More recently, the SEC approved nine spot Ethereum ETFs, including those launched by BlackRock, Fidelity, Bitwise and Invesco.

However, the market response has been more muted. Since their launch, these ETFs have collectively attracted about $7 billion in assets.

The Latest ETF Flows: On Sep. 30, the Bitcoin spot ETF recorded a total net inflow of $61.2 million, marking eight consecutive days of positive inflows.

BlackRock's IBIT ETF alone contributed $72.1 million to this total.

In contrast, Ethereum spot ETFs experienced net outflows totaling $822,300 on the same day, with Grayscale's ETHE ETF accounting for $11.8 million in outflows.

On the brighter side, BlackRock's ETHA managed to pull in $10.9 million.

Mitchnick stressed that the variance in performance is partly due to Bitcoin’s more established narrative in the investment community, while Ethereum requires ongoing educational efforts to help investors grasp its utility and value.

“You don't expect them [Ethereum ETFs] to ever be quite as large in terms of flows and AUM as their Bitcoin counterparts are,” he said.

As BlackRock navigates the evolving crypto landscape, the firm continues to explore other areas within the space, including decentralized finance (DeFi), tokenization and the impact of the upcoming election on market dynamics.

With industry giants like BlackRock actively participating in both Bitcoin BTC/USD and Ethereum ETH/USD ETFs, it's clear that cryptocurrencies are becoming a mainstay in traditional finance, albeit with differing degrees of success.

Why It Matters: These dynamics, including the divergent performance of Bitcoin and Ethereum ETFs and their impact on the broader market, will be key topics of discussion at Benzinga’s Future of Digital Assets event on Nov. 19.

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