Notably, 61% of all bitcoin ETF filing AUM belonged to companies invested in both cryptocurrencies. “The result is that the upper echelon of BTC allocators form a tightly clustered group that hold a very significant chunk of the ETH ownership base,” Kimmel noted.
The investor compositional makeup for the largest of the ETH ETFs differs from BTC ETFs. Unsurprisingly, institutional investors funneled AUM into trusted names. Nearly $500 million of the $2.2 billion in BlackRock’s (ETHA ) was attributed to institutional investors as Q1 13F filings. In comparison, the largest fund in the space at the end of Q1, the (ETHE B), attracted just $149.1 million in institutional flows.
The (ETHU ) from Volatility Shares occupied the fourth spot for largest Ethereum ETF by AUM. “The prominence of this leverage ETF AUM stands out given that leveraged Bitcoin ETFs do not occupy similarly high AUM ranks,” said Kimmel. The firm attributed the trend to elevated retail investor demand for ETH ETFs. They also noted ether’s lack of a “high beta proxy” akin to MicroStrategy for bitcoin.
Overall, it creates an environment that is “structurally different from BTC,” according to Kimmel. While bitcoin and ether are both tokens of their respective blockchains, the use case for each varies greatly. Bitcoin has scarcity and is used primarily as a store of value and alternative to physical assets like gold. Ethereum is a platform used for applications like smart contracts, with ether as its native token. It’s unsurprising that ETH investing differs on a fundamental level.
As the Ethereum network continues to evolve, it may offer a compelling investment case on its own. However, institutional investor uptake of ether remains closely tied to that of bitcoin for now. “While two very different assets, with very different fundamental investment cases, ETH is finding itself as a natural extension of existing crypto strategies, not a separate bet,” Kimmel explained.
