BTC vs ETH: 30-Day ETF Comparison

The Bitcoin ETF began trading on January 10, 2024, marking a significant milestone in the integration of cryptocurrency into traditional finance markets. This launch provided institutional and retail investors with a regulated vehicle for gaining exposure to Bitcoin, a major step forward for the industry. The introduction of this ETF not only brought liquidity to Bitcoin in traditional markets but also set the stage for the approval of additional cryptocurrency ETFs, expanding the range of accessible crypto assets for investors.

In the wake of the Bitcoin ETF launch, speculation surrounding an Ethereum ETF intensified. While initial expectations for approval were tempered, market sentiment shifted when the SEC called for updated S-1 filings in late May 2024. This signaled growing regulatory momentum, and by July 2024, the Ethereum ETF was officially approved, with trading commencing on July 23, 2024.

With both ETFs now trading, it is possible to begin assessing their comparative performance, investor interest, and market demand. Using AmberLens, Amberdata’s Institutional Market Intelligence platform, we found key trends offering insights into how traditional investors are positioning themselves in these two leading digital assets.

Market Reactions and Performance Post-Launch

Let’s review the initial performance and net flows for the first month of the Bitcoin ETF versus the Ethereum ETF. Our baseline assumption was that market cap-weighted flows would occur, with expectations that Ethereum ETF flows would account for approximately 20%-30% of Bitcoin’s net inflows over a comparable time frame.

For consistency, we will compare the first 30 days of trading for both ETFs:

Bitcoin ETF Dates: January 12, 2024, to February 11, 2024

Ethereum ETF Dates: July 23, 2024, to August 22, 2024

Bitcoin ETF Net Flows: First 30 Days

In the first 30 days of trading, the Bitcoin ETF predominantly saw positive inflows. A total of 670,000 BTC, equivalent to $47 billion, was brought under management during this period, representing approximately 3.2% of the total Bitcoin supply. The strong inflows indicate significant early demand from traditional investors eager for exposure to Bitcoin through a regulated vehicle.

However, when examining flows by issuer, we observed notable outflows from the Grayscale Bitcoin Trust. These outflows were largely attributed to Grayscale's higher fee structure compared to newer, lower-cost ETFs as well as the fallout from FTX imploding. Many investors shifted their holdings to these lower-fee options, signaling a trend of fee sensitivity in the marketplace.

Ethereum ETF Net Flows: First 30 Days

In contrast, the Ethereum ETF displayed a more tempered inflow trajectory. Within its first 30 days, the Ethereum ETF experienced an outflow of roughly 170,000 ETH. Despite this, the total ETH under management reached 2,700,000 ETH, approximately $6.7 billion, which accounts for 2.2% of Ethereum’s circulating supply.

Like Bitcoin, Ethereum also saw outflows from Grayscale's Ethereum Trust, driven again by its relatively higher fee structure. However, unlike the Bitcoin ETF, these outflows were not entirely reallocated to other issuers. This suggests that investor demand for Ethereum ETFs is not yet as strong or consistent as it has been for Bitcoin.

Cumulative Asset Holdings by Issuer

In the first month of the Bitcoin ETF, Grayscale experienced a significant decline in market share in terms of assets under management (AUM). Despite this, other issuers showed growth in their cumulative holdings. The chart below represents the cumulative Bitcoin holdings across various ETF issuers by the end of the first 30 days.

Bitcoin ETF Issuer Breakdown: First 30 Days

Grayscale’s AUM in Bitcoin saw a marked reduction, largely driven by investors moving to lower-fee alternatives. This shift underscores a broader trend toward more cost-effective options in the ETF space. However, it’s worth noting that while Grayscale lost market share, total Bitcoin AUM grew across other issuers, reflecting strong overall demand for Bitcoin exposure in traditional markets.

Current Bitcoin ETF Holdings

Looking at the current landscape, the trend of decreasing Grayscale holdings persists, with continued growth in AUM for other major issuers. This indicates sustained interest in Bitcoin ETFs, as investors seek cost-efficient access to Bitcoin through the traditional financial infrastructure.

Ethereum ETF Issuer Breakdown: First 30 Days

Turning to Ethereum, we observe a different dynamic. Grayscale similarly faced notable outflows, but the trend across other issuers was relatively flat for the remainder of the first month. This suggests that while there was some initial enthusiasm for the Ethereum ETF, the momentum did not fully carry through after the first few weeks, indicating a more cautious or measured interest from investors compared to Bitcoin.

Why Are We Seeing Such Divergent On-Chain Activity Between the Bitcoin ETF and Ethereum ETF Launches?

The difference in on-chain activity following the launches of the Bitcoin and Ethereum ETFs can be attributed to several factors, primarily centered around first-mover advantage and differing value propositions.

First-Mover Advantage and Market Dynamics

The Bitcoin ETF, as the first crypto-backed ETF, brought significant momentum to the space by legitimizing the industry further, attracting substantial institutional participation, and providing easier access for retail investors. This first-mover advantage had a profound impact, as it was the first regulated product that allowed traditional investors to gain exposure to Bitcoin, which resulted in heightened market excitement.

Following the Bitcoin ETF launch, the broader crypto market rallied, pushing Bitcoin to new all-time highs of $73,000 by March 2024. It is important to note, however, that this rally materialized three months after the ETF launch, as initial Bitcoin price performance within the first 30 days showed modest growth of around 3%. To date, Bitcoin has appreciated by approximately 20% since the ETF’s inception, underscoring growing investor confidence in the asset.

Ethereum's Post-ETF Performance

In contrast, Ethereum’s price response to the ETF launch has been notably weaker, with the asset down approximately 18% since trading began. Several factors may have contributed to this underperformance, including seasonal market softness during the summer months and more tepid demand for Ethereum exposure via ETFs. Net outflows for Ethereum have not shown the same favorable trajectory as Bitcoin, leading to questions about whether market interest in the Ethereum ETF will pick up in the coming months.

Differing Value Propositions

The divergence in performance and on-chain activity can also be attributed to the distinct value propositions of Bitcoin and Ethereum. Bitcoin, often referred to as "digital gold," has a simple and well-defined narrative as a store of value and inflation hedge, thanks in part to its fixed supply of 21 million BTC. This straightforward narrative makes Bitcoin an attractive and easily understandable investment for both institutional and retail investors, especially during times of economic uncertainty.

Ethereum, on the other hand, presents a more complex and multifaceted value proposition. It serves as the foundation for various applications ranging from decentralized finance (DeFi) and real-world assets (RWAs) to non-fungible tokens (NFTs), staking, and Layer 2 scaling solutions. While this diversity positions Ethereum as a powerful platform, the lack of a singular, clear narrative can make it a more challenging asset for investors to fully grasp and commit to. The multiple use cases also introduce more variables that can influence market sentiment, resulting in a slower and more measured uptake for Ethereum ETFs.

Future Outlook

The investment thesis for Bitcoin is clear and straightforward for most investors. Its value proposition as a store of value, often likened to "digital gold," resonates well, especially within the context of inflation hedging and macroeconomic uncertainty. As such, the adoption of Bitcoin ETFs will likely continue to grow, driven by the strong demand demonstrated thus far. The Bitcoin ETF launch has already proven to be one of the most successful in ETF history, underscoring robust investor interest and appetite for this asset class.

Ethereum, however, has yet to garner the same immediate level of interest that Bitcoin experienced post-ETF launch. Nevertheless, we maintain a highly bullish stance on the long-term adoption of Ethereum ETFs. The current lack of widespread understanding of Ethereum’s value proposition is likely a short-term challenge. As investors become more educated on Ethereum’s unique supply dynamics, its native yield through staking, and the deep liquidity and infrastructure being built on top of its network, sentiment is likely to shift.

Ethereum already underpins the majority of stablecoin liquidity, real-world asset (RWA) protocols, and leading decentralized exchanges. These fundamental strengths and diverse use cases position Ethereum as a long-term growth asset within the crypto space.

Given that we are still within the first year of these crypto ETFs being widely available to institutional and retail investors, there is plenty of optimism about the long-term growth potential for both Bitcoin and Ethereum. Over time, as more investors gain familiarity with the distinct strengths and narratives of each asset, expect continued expansion in ETF participation and broader market adoption.

To view free Bitcoin and Ethereum ETF flows and learn more about the state of the market, visit AmberLens.com. To access the data underlying the metrics, please reach out to sales@amberdata.com.

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