Étienne Girard
The total assets under management (AUM) for U.S.-listed spot Ethereum ETFs have dropped to a record low of $4.57 billion as of April 18. The decline comes after seven consecutive weeks of net outflows, amounting to $1.1 billion being pulled from these funds — signaling weakening institutional interest in ETH-based investment products.
A significant portion of these redemptions has come from Grayscale’s ETHE, which continues to suffer from a hefty 2.5% annual management fee. Investors appear to be rotating into more cost-efficient alternatives, such as BlackRock’s Ethereum ETF, which charges a much lower 0.25% fee.
Much like its Bitcoin equivalent, GBTC, Grayscale’s ETH fund saw a spike in withdrawals following the expiration of lock-up periods, allowing holders to seek more favorable fee structures. In a market where returns are under constant pressure, such cost differentials can heavily impact long-term performance.
Ethereum ETFs Struggle as Bitcoin Funds Remain Resilient
While Ethereum ETFs have faced headwinds, Bitcoin ETFs have largely retained their capital, benefiting from stronger market narratives and wider institutional adoption. Bitcoin’s positioning as “digital gold” continues to attract risk-conscious investors, whereas Ethereum’s multi-faceted utility — including its role in DeFi and staking — has proven harder to market in the ETF format.
The SEC’s regulatory resistance to allowing staking rewards in ETH ETFs has also weakened the appeal for income-seeking investors, stripping one of Ethereum’s core value propositions from the ETF wrapper.
New Altcoin ETF Filings May Dilute Institutional Capital
The ETF landscape could soon become even more fragmented, as pending applications for spot ETFs based on tokens like Solana (SOL), XRP, and Litecoin (LTC) begin to pile up. While product variety may seem beneficial, it also carries the risk of splitting institutional capital across too many assets, potentially leaving none with enough AUM to gain meaningful traction.
Without a clear front-runner among alt-token ETFs, fund managers may struggle to meet critical mass, reducing appeal for larger investors who prioritize liquidity and efficiency in their portfolio construction.
