December marked a historic month for Ethereum (ETH) spot exchange-traded funds (ETFs) in the US, with net inflows reaching $2.1 billion.
This milestone made it the best-performing month for Ethereum ETFs since their introduction in July 2024.
Ethereum ETFs Mark New Monthly High in December
According to data on SoSoValue, BlackRock’s Ethereum ETF (ETHA) led the charge in December, recording $1.432 billion in inflows. Fidelity’s Ethereum ETF (FETH) followed with $752 million, while VanEck’s ETHV came third in December with $12 million in net inflows. While Bitwise managed positive net flows of up to $10 million, Grayscale recorded negative flows of $93 million.
On December 31, the Grayscale Ethereum Trust ETF (ETHE) continued its struggles, reporting a single-day outflow of $5.6 million and an overall net outflow of $3.64 billion. Crypto researcher Trader T corroborates, recording monthly outflows of $274 million for Grayscale’s ETHE in December.
Despite the $2.1 billion milestone, Ethereum ETFs still lag behind their Bitcoin counterparts. BlackRock’s Bitcoin spot ETF (IBIT) led the market in 2024, with a staggering $37 billion in net inflows, significantly ahead of Fidelity’s Bitcoin ETF (FBTC) at $12 billion. In contrast, BlackRock’s Ethereum ETF (ETHA) accumulated $3.5 billion in inflows in 2024, followed by Fidelity’s $1.5 billion.
While December’s record-breaking performance provided a much-needed boost, 2024 has been a challenging year for Ethereum overall. According to a report by 10X Research, Ethereum has struggled to maintain its dominance as competing blockchains like Solana and Tron have gained traction. Based on this, among other reasons, 10X Research expressed skepticism about Ethereum’s prospects in 2025.
“The absence of significant catalysts and the risk of validators unstaking present major challenges. Unless Ethereum can innovate and regain user interest, its underperformance relative to Bitcoin may continue,” the report read.
Ethereum’s 2024 struggles are evident in its market performance: while Bitcoin surged 120% last year, Ethereum gained only 48%. This 70% underperformance relative to Bitcoin has raised questions about Ethereum’s value proposition and the effectiveness of its ongoing upgrades.
Ethereum’s Staking Concerns and Usage Stagnation
According to 10X, one of Ethereum’s key selling points, staking, has also faced criticism. With 28% of all ETH staked, many argue that Ethereum has transitioned into a passive income vehicle rather than an actively utilized blockchain for DeFi and other activities. Staking yields, currently around 3%, have become less attractive compared to traditional financial (TradFi) interest rates.
The Ethereum network has also struggled to regain its peak activity levels. Weekly transactions, which peaked at 11 million in May 2021, have plateaued at around 9 million. Similarly, active weekly addresses have remained range-bound between 300,000 and 400,000.
“Ethereum’s stagnation contrasts sharply with the growth of alternative blockchains. The chain’s decline in user activity and its inability to catalyze innovations point to a deeper systemic issue,” the 10X Research added.
Other pressing concerns include the trend among validators. The 1-month growth rate of active validators has turned negative, raising fears that some may exit the network. If this trend accelerates, it could lead to additional downward pressure on ETH prices.
Adding to the uncertainty is Ethereum’s realized price — the average price at which the entire ETH supply last moved on-chain — currently at $2,093. This is below the average deposit price for staked ETH of $2,383, suggesting that validators may face losses if prices continue to decline.
Despite the challenges, the December inflows highlight Ethereum’s enduring appeal to institutional investors. As the ETH ETF market matures, Ethereum could benefit from broader adoption and improved liquidity.
BeInCrypto data shows ETH is down by 0.37% since the Wednesday session opened. As of this writing, Ethereum’s price was $3,333.
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Lockridge Okoth
https://beincrypto.com/ethereum-etfs-set-new-record/
2025-01-01 08:00:00
