In Summary

Ethereum ETFs hit $4.57B AUM after $1.1B in outflows.

High fees, staking uncertainty, and competition driving investors away.

Ethereum ETFs underperform compared to Bitcoin ETFs.

SEC’s cautious stance on staking limits Ethereum ETF appeal.

BlockZ Trading, Sunday, May 03, 2025-Assets under management in Ethereum exchange-traded funds(ETFs) have plunged to a record low of $4.57 billion, following seven consecutive weeks of net outflows totaling more than $1.1 billion, data through April 18 shows.

The pullback underscores growing investor reluctance toward Ethereum-linked investment products, especially as fee competition and staking uncertainty weigh on sentiment. Grayscale’s ETHE was the primary contributor to the outflows, with its high 2.5% management fee prompting investors to shift toward lower-cost alternatives, such as BlackRock’s ETH ETF, which charges just 0.25%.

The Ethereum ETF performance comes in sharp contrast to Bitcoin ETFs, which have largely maintained robust AUM levels despite broader crypto market volatility. Analysts point to Bitcoin’s clearer investment narrative as “digital gold” and stronger institutional familiarity as key advantages over Ethereum’s more nuanced value proposition.

Further compounding the challenge for Ethereum ETFs is the Securities and Exchange Commission’s cautious stance on allowing staking in such products. That restriction removes a core incentive for ETH holders—yield generation—potentially limiting the appeal of holding Ethereum via an ETF wrapper.

The broader market for crypto ETFs also faces potential fragmentation, as new filings for Solana, Ripple’s XRP and Litecoin products could spread institutional capital thin. Analysts warn that this proliferation risks preventing any single alt-token ETF from achieving critical mass, dampening institutional allocation prospects across the sector.

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