As the year comes to a close, Ethereum exchange-traded funds (ETFs) are experiencing significant growth, with net inflows reaching record-breaking levels. According to data from CoinShares, Ether ETFs have seen seven consecutive weeks of net inflows, including a staggering $2.2 billion in the week of November 26.
A Record-Breaking Week for ETH ETFs
This uptrend is expected to continue into 2025, driven by several factors, including strong spot ETH price performance and regulatory developments that could allow Ether ETFs to generate yields from staking. Nate Geraci, president of The ETF Store, notes that net inflows into ETH ETFs are "currently on pace with gold [ETFs], but I expect inflows to accelerate from here."
Price Outperformance
Since November, Ethereum (ETH) has outperformed Bitcoin (BTC) in both spot and derivatives markets, according to a December report by Bybit. This price outperformance is expected to continue, with asset manager VanEck estimating that ETH’s spot price will reach $6,000 by the fourth quarter of 2025.
The Role of Artificial Intelligence
The growth of Ethereum network activity, including from the proliferation of artificial intelligence agents, could further propel Ether’s performance. Matt Hougan, Bitwise’s head of research, notes that "Ethereum and Base, an Ethereum layer-2 scaling network, are where many AI agents are currently operating." He adds that while Solana is often associated with AI activity, a significant amount of this work is actually happening within the ETH ecosystem.
Staking in ETFs
The introduction of staking yield into Ether ETFs could further boost their performance. Staking involves locking up ETH as collateral with a validator on the Ethereum network, earning ETH payouts from network fees and other rewards. As of December 20, staking Ether earns approximately 3.35% in annualized percentage returns (APR), denominated in ETH.
Regulatory Developments
United States-based Ether ETFs may soon feature staking yield, according to Bernstein Research’s December report. The US Securities and Exchange Commission (SEC) has already approved two ETFs comprising a market-weighted index of BTC and ETH, creating another potential avenue for boosting ETH fund inflows.
Expert Insights
Nate Geraci, president of The ETF Store, notes that the growth of Ether ETFs is a promising trend. "I think it’s reasonable to expect that we’ll see staking investigated and potentially applied in the ETF space" in the US, he says.
Matt Hougan, Bitwise’s head of research, adds that "a lot of people assume [AI activity] is happening on Solana. Actually, a lot of it is happening in the ETH ecosystem." He is bullish on both Ethereum and Solana but notes that Ethereum is "underestimated" in this regard.
Conclusion
The growth of Ether ETFs is a significant trend that is expected to continue into 2025. With strong spot price performance, regulatory developments, and growing network activity, these funds are poised for further growth. Analysts expect net inflows to accelerate from here, making them an attractive option for investors.
Key Takeaways
- Ethereum exchange-traded funds (ETFs) have seen seven consecutive weeks of net inflows.
- The record-breaking week saw $2.2 billion in net inflows into ETH ETFs.
- Analysts expect this trend to continue into 2025, driven by strong spot price performance and regulatory developments.
- Staking yield may soon be introduced into Ether ETFs, further boosting their performance.
Recommendations
- Investors should consider adding Ether ETFs to their portfolios to benefit from the expected growth in 2025.
- Regulators are closely watching staking yield in the context of ETFs and may soon allow its introduction.
- The Ethereum network is poised for continued growth, driven by growing network activity and AI adoption.
Additional Resources
- Ethereum – Learn more about Ethereum, including its history, features, and use cases.
- CoinShares – Get the latest data on crypto assets and ETFs from CoinShares.
- The ETF Store – Explore ETFs and other investment options with The ETF Store.
Subscribe to Our Newsletter
Stay up-to-date with the latest news, insights, and trends in the world of finance. Subscribe to our Markets Outlook newsletter for critical analysis and expert opinions on investing, trading, and more.
