Grayscale’s Ethereum ETF Net Outflows Top $1.5 Billion After First Week

• The Grayscale Ethereum Trust (ETHE) shed over $300 million in its fourth day of net outflows.
• Meanwhile, Grayscale’s Mini Ethereum Trust (ETH) has seen four days of consecutive inflows totaling over $164 million.
• Grayscale’s Ethereum Trust (ETHE) could empty in a matter of weeks if outflows remain consistently high.

U.S. spot Ethereum (ETH) exchange-traded funds (ETFs) continue their streak of outflows, but thanks to only one fund that reported net losses.

On the fourth day of trading, the Grayscale Ethereum Trust (ETHE) saw over $350 million exit the fund, bringing its total outflows to over $1.5 billion.

Ethereum ETFs

As per data provided by SoSoValue , U.S. Spot Ethereum ETFs posted their third consecutive day of cumulative net outflows, shedding a total of $162.67 million on Friday, July 26, 2024.

Looking at the day’s top gainers, BlackRock’s iShares ETF (ETHA) once again led the pack with a solid $87.22 million of net inflows, bringing its total inflows since launch to $439 million. The Grayscale Ethereum Mini Trust (ETH) also enjoyed solid gains, bagging $44.94 million and bringing its total inflows to $164.11 million since July 23, 2024.

Smaller gainers include Fidelity’s Ethereum Fund (FETH), which saw $39.26 million enter the fund, Bitwise’s Ethereum ETF (ETHW) with $15.96 million, and Franklin Templeton’s Ethereum ETF (EZET) with a modest $6.21 million.

VanEck’s Ethereum ETF (ETHV), 21Shares Core Ethereum ETF (CETH), and Invesco Galaxy’s Ethereum ETF (QETH) all saw neutral flows despite solid trading volumes. Once again, the net outflows for the day were disproportionality caused by outflow king, Grayscale.

Grayscale ETFs Flippening?

Grayscale’s Ethereum Trust (ETHE) posted its fourth consecutive day of outflows, which saw $356.26 million exit the fund, bringing its total outflows to over $1.5 billion.

It appears as though Grayscale’s management fees are the driver behind so many exits. ETHE carries a 2.5% fee, which is 1% higher than that of the Grayscale Bitcoin Trust (GBTC) and is more than ten times that of most other funds.

Most other Ethereum ETFs currently offer a 0% fee, and after the fee waiver periods are over, then they’ll sit somewhere between 0.19% and 0.25%. Oddly, Grayscale managed to simultaneously launch the Ethereum Mini Trust, which currently carries a 0% fee and will carry a 0.15% fee post-waiver.

It does seem that the mini-fund is managing to net some of the losses from ETHE, but not quite enough to offset the significant losses.

An Empty ETF?

Though not so much a concern for the broader crypto market or the Ethereum ETF market for that matter, Grayscale’s ETHE outflows could see the fund depleted in a matter of weeks if it continues to shed hundreds of millions every day.

With just $7.11 billion left in the fund, another ten days of $300+ million outflows would cut the ETF’s net assets in half.

It’s rare for an ETF’s net assets to reach zero, but when they do, the issuer can effectively close the fund. Whether or not Grayscale intends to do so is unclear, though their strategy to launch a larger ETH ETF with a 2.5% management fee, and a far smaller 0.15%, may have been a costly gamble.