Ethereum ETF Launch Day Recap: Grayscale Sees Net Outflows Exceeding $480 Million, Bitwise Nets Inflows Exceeding $200 Million

Original Title: "ETHW Makes Stunning Debut with over $200 Million Raised, What Is the Strategy of Bitwise, the "First Mover," in the Crypto ETF Battle?"

Original Author: Nancy, PANews

The tenth anniversary of Ethereum saw a milestone development as 9 spot ETFs finally received approval, with 8 issuers achieving the mainstreaming of Ethereum after years of regulatory hurdles. On the first day of trading on July 23, the Ethereum spot ETF's trading volume exceeded $1 billion, representing 23% of the $46 billion in trading volume on the first day of the Bitcoin spot ETF in January of this year.

While an increase in market demand will drive the soaring popularity of crypto ETFs, the showdown of homogeneous products is bound to be intense, as already seen in the market landscape of the Bitcoin spot ETF. Among these issuers, the crypto-native institution Bitwise does not have the same appeal as traditional giants like BlackRock and Fidelity, but the size of its crypto ETF's funds is still considerable, making its underlying "tactics" worth noting.

Bitwise is one of the well-known crypto index fund management companies in the United States, having launched its first crypto index fund in 2017 and now offering 20 products covering ETFs, publicly traded trusts, private funds, hedge funds, and NFT collections.

ETHW's Listing Debut Trading Raises over $200 Million, BITB Attracts over 110 Holding Institutions

The revival and prosperity of the crypto market are the prerequisites for ETF development. This year, the approval of the Bitcoin spot ETF, narratives such as the U.S. presidential election and Fed interest rate cuts, are driving the V-shaped reversal of the crypto market, with these ETFs as old money channels also being among the first beneficiaries, experiencing strong growth momentum.

Last night, the Ethereum spot ETF made its listing debut, with a total trading volume of over $1 billion on the first day, mainly coming from Grayscale ETHE, BlackRock ETHA, and Fidelity FETH. However, according to Farside Investors data, the Ethereum spot ETF was in a state of outflows on the day of listing, with Grayscale ETHE experiencing a net outflow of over $480 million, but Bitwise's ETHW was the "gold-absorbing" main force with a net inflow of over $200 million, far exceeding Fidelity FETH's $71.3 million and Franklin EZET's $13.2 million, among others.

At the same time, Bitwise's Bitcoin spot ETF has also shown a considerable performance. According to SoSoValue data, as of July 22, the total net asset size of the U.S. Bitcoin spot ETF had risen by hundreds of billions of dollars in half a year, reaching $62.14 billion. Although the top effect in the current Bitcoin spot ETF market is significant, in terms of fund flows, Bitwise's Bitcoin spot ETF BITB is also a favored investment target for investors.

According to SoSoValue data, as of July 22, the cumulative net inflow of BITB reached $2.2 billion, ranking fifth, surpassing the sum of the net inflows of the six lowest-ranking Bitcoin ETFs, showing a significant lead over this segment of ETFs. At the same time, BITB's total assets under management reached $2.72 billion, ranking fifth among the 11 US Bitcoin futures ETFs, with a market share of 4.5%. Although its overall market share still cannot compete with top ETFs such as BlackRock and Grayscale, according to Dune data, BITB's weekly funds are mainly characterized by net inflows, with only a few outflows.

Moreover, in terms of price performance, since its launch, the price of BITB has risen by nearly 45.7% to $37.2. According to Fintel data, as of July 23, there are 117 publicly listed companies holding BITB, with a total holding of around 1,067 BITB shares valued at over $390 million.

Fintel statistics show that BITB's institutional holders include investment advisory firms Pine Ridge Advisers, US-based market maker Jump Trading, hedge fund management firm Boothbay Fund Management, overseas hedge fund giant Millennium Management, and options trading giant Susquehanna International Group. Bitwise CEO Hunter Horsley recently revealed that a major US bank has 20% of all its wealth management branches (several hundred) holding the Bitwise ETF.

For a crypto-native asset management company without a deep traditional financial background, Bitwise has made a strong start. The Bitwise Asset Management team comprises over 60 professionals with backgrounds in firms such as BlackRock, Millennium, Blackstone, ETF.com, Meta, Google, and the US Attorney's Office. Among them, Bitwise CEO Hunter Horsley previously served as a product manager at Facebook and Instagram, graduated from the Wharton School at the University of Pennsylvania. Bitwise has received multiple rounds of funding from investors including Elad Gil, Electric Capital, Bridgewater CEO David McCormick, Blackstone executive Nadeem Meghji, Vetamer Capital, ParaFi Capital, and Coinbase Ventures.

The Three Major ETF Competitive Strategies, Bitwise Bullish on Crypto Assets

Rushing to be the first to market, increasing speed, lowering fees, fee waivers... Each issuer is secretly competing for the top spot.

To achieve greater scale and liquidity compared to many competitors, Bitwise focuses on aspects such as launch timing, trading fees, and ecosystem support.

The early bird catches the worm, as is often the case in the ETF business. As one of the first approved Bitcoin spot ETFs, Bitwise submitted its application as early as October 2021 and was finally approved in January of this year after multiple rejections by the SEC. Regarding the Ethereum spot ETF application, although Bitwise's application was later than that of other competitors, it was still the "first mover," and Bitwise was also the first to disclose a $2.5 million seed fund for the Ethereum spot ETF issuer.

Additionally, to avoid falling behind in the fiercely competitive race, fees have become a breakthrough for each issuer to create a differentiated competitive advantage, which is also the most effective way to compete. In terms of fees, BITB has the lowest management fee among all Bitcoin spot ETFs, with a management fee of only 0.2%, and the first $1 billion in assets have a 0% management fee for the first six months; ETHW's fee is also 0.2%, second only to Franklin Templeton's "EZET" and Grayscale's Ethereum Mini ETF "ETH," with fee waivers for the first $500 million or the first six months. Clearly, low fees are a key driver for Bitwise to attract fund inflows.

In addition to these conventional expansion strategies, Bitwise has also won favor and recognition from the crypto community by providing financial support for the development of the Bitcoin and Ethereum ecosystems.

Upon the launch of BITB, Bitwise announced that it would donate 10% of BITB's profits to three non-profit organizations that fund Bitcoin open-source development: BrinkOpenSats and the Human Rights Foundation's Bitcoin Development Fund, which play a critical role in improving the security, scalability, and usability of the Bitcoin network. These donations will be made at least once a year for the next 10 years to further support the health and development of the Bitcoin ecosystem. Similarly, ETHW will also donate 10% of the fund's profits to the Ethereum open-source developers Protocol Guild and PBS Foundation, with donation plans to continue for at least 10 years, annually, and recipient organizations may change based on annual reviews. To ensure transparency, the Bitcoin address for BITB and the Ethereum address for ETHW have been made public.

It is worth mentioning that Bitwise has been openly bullish on the outlook for crypto assets. Bitwise CIO Matt Hougan recently stated that the Bitcoin spot ETF inflows, Bitcoin halving, a shift in the political attitude toward an Ethereum spot ETF, and the prospect of a Fed rate cut have all created a better long-term environment for cryptocurrency. In addition, with the strong growth of the stablecoin market, Layer 2 development, and more institutions like BlackRock getting involved in the space, the right development combination in the second half of the year could easily propel Bitcoin to $100,000. Furthermore, although the price of ETH is expected to be "volatile" in the first few weeks after the launch of an Ethereum ETF, as funds may flow out of the $11 billion Grayscale Ethereum Trust (ETHE) into the spot ETF, the price of ETH is projected to surpass $5,000 and hit a new all-time high by the end of the year. If the influx is stronger than many market commentators expect, the price could go even higher.

Original Article Link