Ethereum ETF Investors “Substantially Underwater” — Will ETH Recover?

• Glassnode reports that Ethereum ETF outflows accelerated whenever Ethereum’s spot price dropped below the average cost basis.
• Investor sentiment has started to shift, with nine consecutive days of net inflows into Ethereum ETFs totaling $435.6 million as of May 2025.

Investors in BlackRock and Fidelity’s spot Ethereum ETFs are currently sitting on 20% unrealized losses, as shown by data from Glassnode. Despite the Ethereum price gaining 46% over the past month, it is still trading below the average cost of acquisition for these ETFs.

Ethereum ETF Sees Sluggish Growth

Glassnode has released its latest analysis, which finds that the cost basis for BlackRock’s Ethereum ETF (ETHA) is $3,300 and Fidelity’s FETH is $3,500. “The average investor in the BlackRock and Fidelity Ethereum ETFs are now substantially underwater on their position, holding an unrealized loss of approximately -21% on average,” according to Glassnode’s report.

The ETH price hasn’t been able to rise above its early February high of $3,200 since then. The altcoin came under major selling pressure soon as Trump trade tensions led to market uncertainty. 

Uncertainty in the markets, brought on by taxation of imports from China, Mexico, and Canada, affected all kinds of assets, including cryptocurrencies. The situation got worse after Trump introduced his tariffs on April 9, when Ethereum touched a one-year low at $1,472.

When the average cost basis went below the price, significant withdrawals from Ethereum ETFs increased, per the Glassnode report. “We can see that net outflows begin to accelerate when the spot price dropped below this average ETF investor cost-basis level in August 2024 and January and March of 2025,” the firm noted.

Ether ETFs Are Catching Up Recently

Still, investor sentiments are starting to change. For nine days in a row starting on May 16, investors have bought more Ethereum ETFs than have sold, adding up to $435.6 million. The change comes as U.S.-led trade conflicts are starting to ease.

It is worth noting that a federal court ruled against some of President Trump’s tariff actions on May 28, calling them an overreach of power, leading to upside across the financial markets. Since the inception last year in July 2024, net inflows into spot Ethereum ETF stand at $2.94 billion, however, Glassnode believes the ETFs have not significantly affected the overall spot Ether market. Ethereum ETFs only saw a light level of trading on their first day, making up no more than 1.5% of the total spot market volume. It noted:

The Ethereum ETFs initially accounted for just ±1.5% of the trade volume in spot markets, suggesting a relatively lukewarm reception on launch. The ETFs experienced a period of stronger growth in Nov 2024, where this measure increased to over 2.5%, however has since declined back towards 1.5% for 2025

Despite a rise in recent ETF purchases, the main early investors remain in the red because Ethereum is down nearly 26% since last July. It is not clear if this ETH recovery will continue further, since macro uncertainties persist with hopes of Fed rate cuts.