On Tuesday, Ethereum spot exchange-traded funds (ETFs) made their debut in the United States financial markets with a total of nine providers launching ETH-linked products on multiple stock exchanges.

The launch marks the beginning of a new era for the smart contracts network. These vehicles come to join the Bitcoin-linked spot ETFs launched in January this year.

On their first day of trading, estimates from CF Benchmarks indicate that ETH-linked spot products attracted over $100 million. Meanwhile, trading volumes exceeded $1 billion as investors’ interest in regulated crypto-linked investment products remains strong.

The BlackRock iShares Ethereum Trust ETF (ETHA) led the pack and attracted an impressive $266.5 million in capital inflows during this first trading session followed by the Bitwise Ethereum ETF (ETHW), which received $204 million from investors.

Meanwhile, the Fidelity Ethereum Fund (FETH) came third as it pulled over $70 million in assets.

One notable event was the conversion of the Grayscale Ethereum Trust (ETHE) into an exchange-traded fund (ETF) on the day that these products were launched. ETHE experienced sizable outflows of around $485 million – around 5% of its assets – but still ended the session managing approximately $9 billion for investors.

ETHE charges a higher management fee compared to this new pack of competitors with an expense ratio of 2.5%. Meanwhile, the vehicles launched on Tuesday charge fees ranging from 0.2% to 0.25% and some have even opted to waive their fees for a specific period to attract capital.

Other notable performers included Franklin Templeton’s Franklin Ethereum ETF (EZET), which attracted $13.2 million in inflows, and 21Shares’ Core Ethereum ETF (CETH), which saw inflows of $7.4 million.

ETH Drops Following Launch of Spot ETFs

Counterintuitively, the launch of these Ethereum-linked spot ETFs was accompanied by a 4.2% drop in the price of Ether (ETH). Meanwhile, the value of the native token of the smart contracts network is dropping another 4.7% as of this morning to below $3,170

The Ethereum Volmex Implied Volatility Index (EVIV) dropped by 4 points to 65 in the 24 hours that followed the launch of these products. EVIV measures the 30-day expected volatility of ETH.

Analysts pointed out that this was a positive sign that spot ETFs could help reduce the overall volatility of ETH.

James Seyffart, a Bloomberg analyst, pointed out that the spot Ethereum ETF volumes amounted to 21% of the $4.66 billion seen on the debut of Bitcoin-linked spot ETFs. This comparison provides context and gauges the market’s interest in Ethereum as an investment vehicle compared to BTC.

Analysts Deem the Launch a “Marginal Success”

Adrian Fritz, the research head at 21Shares, pointed out that although the launch of the Ethereum ETF was impressive, it did not reach the level of the Bitcoin ETF debut. He called the latter “the most successful ETF launch in financial history.” Fritz explained that this difference comes from the complicated value proposition of Ethereum, while Bitcoin has a clearer story as a store of value or “digital gold.”

Meanwhile, the crypto market maker Wintermute Trading characterized the launch as a “marginal success”. They highlighted strong interest from institutional investors and also the apparent rotation of assets from the higher-fee Grayscale fund to lower-cost alternatives.

Zach Pandl, Grayscale’s head of research, remained optimistic about the long-term implications of the Ethereum ETF launch, suggesting that investors “may be underappreciating the importance of this milestone for the current market cycle and for the crypto industry over the longer-term.”

CCData commented in a report that they expect to see ETH-linked spot products attract around $3 billion from investors within the next six months. However, they emphasized that the market’s predictions ranged from $1 to $7.5 billion.

“Given the larger-than-expected outflows from the Grayscale Ethereum Trust, these inflows align with the consensus expectation of around 20 percent of the spot Bitcoin ETFs’ assets under management,” CCData analysts commented.

To date, Bitcoin-linked spot ETFs have attracted a total of $17 billion in fresh capital since their January debut. BlackRock’s iShares Bitcoin Trust is first on the list with $22 billion in AUM.

The launch of spot Ethereum ETFs is an important step in making digital assets more accessible to regular investors and institutions. While their introduction wasn’t as flashy as that of Bitcoin ETFs, these products still gained considerable attention and investment from a range of investors.

The next few months will be crucial to determine if Ethereum spot ETFs can take advantage of the initial momentum to attract a larger investor base. Further regulatory clarity on the subject of staking and concerted efforts to educate the investment public about the value proposition of the Ethereum network may play a significant role in shaping the demand for these products in the future.

It remains to be seen if the impact of this launch on the price of Ethereum will be significant. In the case of Bitcoin (BTC), the price of the crypto asset has surged by over 40% since the launch of its spot ETFs in January.

However, it is worth noting that other major catalysts took place during this period including the cryptocurrency’s fourth halving.