BlackRock sees potential in spot Ethereum ETF despite slower uptake compared to Bitcoin

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BlackRock’s spot Ethereum ETF, also known as ETHA, has seen slower growth than its Bitcoin counterpart, but Robert Mitchnick, the firm’s head of digital assets, remains optimistic about its long-term prospects, especially given in view of the rapid accumulation of assets under management (AUM). .

“It’s very rare to see an ETF reach a billion AUM in seven weeks like ETHA did,” Mitchnick said, speaking at the Messari Mainnet conference in New York this week. “In most cases, it takes several years for a new ETF to never reach a billion.”

Launched in July after surprise SEC approval, it took less than a month for ETHA to reach $1 billion in net inflows. As of September 30, ETHA’s Ethereum holdings exceeded 380,601 ETH, valued at approximately $1 billion.

Despite lagging behind BlackRock’s Spot Bitcoin ETF (IBIT), which amassed $2 billion in AUM just 15 days after launch, ETHA is still among the best-performing crypto ETFs in world.

The stagnant performance is not entirely unexpected for BlackRock and other ETF experts. Mitchnick believes that the investment story and narrative for Ethereum is “less easy” for investors to “digest”.

“So that’s a big part of why we’re so committed to the educational journey that we go on with many of our customers,” he explained.

BlackRock’s head of digital assets said he did not expect ETHA to ever reach the same level of flows and AUM as IBIT, but saw the current performance as a “good start”.

Speaking at the Bitcoin 2024 convention in Nashville in July, Mitchnick said the company’s customer base is primarily interested in Bitcoin, followed by Ethereum. There are “very little” demand for crypto ETFs beyond the top two crypto assets, he noted.

For BlackRock, Bitcoin and Ethereum provide complementary benefits rather than competing for the same role. Mitchnick predicted that investors will allocate 20% of their crypto holdings to Ethereum and the remaining 80% to Bitcoin.

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