Ethereum’s ETF Growth Slower Than Expected: Here’s Why

• Ethereum ETFs faced slow growth due to market conditions and timing.
• Bitwise CEO notes seasonal slowdown and Bitcoin dominance as factors.
• Ethereum ETFs still rank among the top 25 fastest-growing ETFs in 2024.

Hunter Horsley, CEO of Bitwise, analyzed the underperformance of Ethereum ETFs compared to their Bitcoin counterparts. Despite these challenges, Horsley remains optimistic about Ethereum’s ETF market, emphasizing that some funds rank among the fastest-growing in 2024.

Since its inception, Ethereum ETFs have faced numerous challenges that have slowed their adoption rate and popularity relative to Bitcoin ETFs. Bitwise CEO Hunter Horsley offered insights on why they haven’t garnered the same level of success as anticipated. During a recent event, the top executive acknowledged the slower growth and highlighted three main factors that might have hindered Ethereum ETF’s success.

First, Horsley pointed out that many investors took a more cautious approach during the summer, a time when fewer projects were launched. This seasonal slowdown affected the traction of Ethereum ETFs. Second, the overall market was stagnant when the Ethereum ETF launched, unlike the bull market that boosted Bitcoin ETFs. A bull market tends to attract more investment, which Ethereum lacked during its launch phase.

Proof-of-Stake and Bitcoin’s Dominance Pose Challenges

Finally, Horsley suggested that Bitcoin’s dominance in the crypto space overshadowed Ethereum ETFs. With traditional investors still learning how to incorporate Bitcoin into their portfolios, Ethereum’s Proof of Stake mechanism (PoS) adds complexities for fund managers building ETFs. The shift to PoS and the evolving nature of the Ethereum ecosystem (dApps, DeFi, and NFTs) make it harder to explain to traditional investors, who may not fully grasp its value proposition compared to Bitcoin.

Read also: SEC Approves Bitcoin ETF Options on NYSE: A New Era for Crypto Traders

Despite these initial hurdles, Ethereum ETFs, especially those launched by iShares, Fidelity, and Bitwise, are among the fastest-growing funds of the year. Out of 525 ETFs launched in 2024, 13 of the top 25 are either Bitcoin or Ethereum-related, reflecting the continued interest in cryptocurrency assets. 

Horsley noted that the saga of Ethereum ETFs is just beginning, and while the initial launch did not meet some expectations, the long-term outlook for these funds remains positive. As cryptocurrency gains more traction, Ethereum ETFs may soon catch up to Bitcoin in market success.