Investors Are Leaving Grayscale as BlackRock Dominates ETH
- BlackRock’s ETH ETF rapidly gains institutional inflows, signaling a strong shift in investor preference toward newer fund structures.
- Grayscale’s declining ETH holdings reveal investor exits, despite AUM remaining stable due to Ethereum’s rising valuation.
Competition among spot Ethereum ETFs in the United States is heating up, and the winner—at least for now—is starting to become clear.
Data shared by analyst CryptoOnchain at CryptoQuant shows that BlackRock, with its ETF product called ETHA, has succeeded in attracting large and rapid inflows of ETH. The bright blue line in the ETH holdings chart illustrates this explosive growth, seemingly a major magnet for institutions looking to invest in this crypto asset.
Source: CryptoQuant
While Grayscale Slips, BlackRock Quietly Takes the Lead
In contrast, Grayscale—once the king in this space—is slowly losing its edge. The chart shows a pink line resembling the movement of Grayscale’s ETHE ETF, which continues to move downward. Investors appear to be withdrawing their ETH.
Interestingly, however, Grayscale’s AUM, or total assets under management, appears more stable, even rising. This isn’t because they’ve received new funds, but because the price of ETH has risen, so AUM still appears “healthy” despite dwindling holdings. So, while things may seem fine at first glance, they’re not.
Furthermore, a report from the CNF confirms a shift in institutional accumulation patterns. Currently, a total of 6.069 million ETH is locked in Ethereum ETFs in the US. That’s certainly a significant amount. But there are implications worth noting.
The inclusion of ETH in ETFs reduces liquidity on the exchange. The consequence? The risk of higher volatility. If there’s a market shock, the movement could be sharper, both upward and downward.
Solana Shake-Up and Ethereum ETF Race Intensify
BlackRock’s entry into the Ethereum ETF market has indeed changed the landscape. But a similar story is unfolding in another arena: Solana. Two weeks ago, we highlighted Bloomberg’s James Seyffart’s statement about the Solana ETF, which has once again sparked debate.
According to him, BlackRock’s “later-on-the-ground” involvement has actually displaced early applicants like Bitwise, Fidelity, Grayscale, Franklin Templeton, CoinShares, Canary Capital, and VanEck. They had already been in extensive communication with the SEC.
Returning to Ethereum, it’s not just BlackRock that’s been aggressive. Fidelity, with its FETH, has also shown steady accumulation. Franklin Templeton, through EZET, then Bitwise, VanEck, and others began to increase their share. But still, they all seem to be lagging behind BlackRock’s ETHA.
Some say their strategy is too conservative. Others say they’re simply losing momentum. Who knows.
On the other hand, Grayscale seems to be struggling even more. Investors seem to be realizing that high AUM figures don’t necessarily indicate new funds coming in. Sometimes, it’s just a price illusion. Especially if the actual ETH is being withdrawn quietly. And yes, that’s what’s happening now.
Investors are now more discerning. They’re not just looking at AUM, but also paying attention to actual ETH holdings. This is important, because ETFs with a lot of real ETH under their hood are more resilient to market turmoil. And so far, BlackRock is leading the way.
Meanwhile, as of press time, ETH is changing hands at about $4,749, up 0.65% over the last 24 hours and 6.23% over the last 7 days.
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