The landscape of cryptocurrency exchange-traded funds (ETFs) has witnessed a significant shift in favor of Ether-based ETFs in 2024. According to data from Farside Investors, total net inflows into Ether ETFs surpassed $2.6 billion in December, as these funds gained traction against their popular Bitcoin-based counterparts.
Eight Straight Weeks of Net Inflows
Ether ETFs have been on a remarkable streak, with eight consecutive weeks of net inflows in November and December. This phenomenon is attributed to the growing popularity of Ethereum, which has outperformed Bitcoin in crypto spot and derivatives markets since November, according to a report by Bybit.
Record-Breaking Week for Ether ETFs
The week of November 26 saw an unprecedented $2.2 billion in net inflows into Ether ETFs, cementing their position as the most popular choice among investors. This trend suggests that investors are increasingly looking towards Ethereum as a viable alternative to Bitcoin.
Regulatory Support and Improved Returns Key to Success
Analysts believe that this momentum can be sustained if regulators allow Ether-based ETFs to generate yields from staking. This would not only enhance the returns for investors but also provide a significant boost to the overall ecosystem of Ethereum.
BlackRock’s iShares Ethereum Trust Leads the Pack
Among the top-performing Ether funds, BlackRock’s iShares Ethereum Trust (ETHA) took the lead with over $3.5 billion in 2024 net inflows. Fidelity Ethereum Fund (FETH) followed closely with $1.5 billion in net inflows.
Grayscale Ethereum Trust Experiences Significant Net Outflows
In contrast, Grayscale’s Ethereum Trust (ETHE), which was launched in 2017 as a non-listed trust, saw significant net outflows of over $3.6 billion. This can be attributed to the higher management fees charged by Grayscale, which stand at 1.5%.
A Cheaper Alternative Emerges
In July, Grayscale listed its Ethereum Mini Trust as a cheaper alternative to ETHE. However, this move failed to stem the net outflows from ETHE, highlighting the preference of investors for lower-cost options.
Bitcoin ETFs Display Similar Dynamics
The trend observed in Ether-based ETFs is mirrored in Bitcoin-based funds. BlackRock’s iShares Bitcoin Trust (IBIT) recorded approximately $37 billion in 2024 net inflows against more than $20 billion in net outflows from Grayscale Bitcoin Trust (GBTC).
Will Ether Outperform Bitcoin ETFs in 2025?
The momentum observed in Ethereum-based ETFs raises the question of whether they can outperform their Bitcoin counterparts in 2025. Matt Hougan, head of research at Bitwise, believes that sustained growth in network activity, including from the proliferation of artificial intelligence agents, could further propel Ether’s performance.
Ethereum’s Growing Popularity Among AI Agents
Hougan pointed out that Ethereum and Base, an Ethereum layer-2 scaling network, are ‘where many AI agents are currently operating.’ This growing interest in Ethereum among AI developers is expected to drive the adoption of this platform even further.
Estimates for Ether’s Spot Price in 2025
Asset manager VanEck estimates that Ether’s spot price will reach $6,000 by the fourth quarter of 2025. While this prediction may seem ambitious, it highlights the potential for significant growth in Ethereum’s value in the coming year.
Conclusion
The success of Ether-based ETFs in 2024 is a testament to the growing popularity of Ethereum among investors. As regulators begin to allow staking yields for these funds, we can expect even greater traction in the future. The momentum observed in Ethereum’s growth, coupled with its increasing adoption by AI developers, makes it an attractive option for those looking to invest in cryptocurrencies.
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