Ethereum is facing a collapse in investor confidence. Data from The Block shows that as of April 18, 2025, the total AUM of spot Ethereum ETFs has plummeted to $4.57 billion, hitting a new low since these products were launched. Adding to the challenge, these ETFs have experienced net outflows for seven consecutive weeks, with a cumulative outflow of $1.1 billion. This trend stands in stark contrast to Bitcoin ETFs, which, despite market volatility, have managed to maintain a relatively more stable AUM.
Multiple Factors Impacting Investor Confidence
Grayscale's Ethereum Trust converted ETF (ETHE) is one of the primary sources of fund outflows. Analysts point out that ETHE's relatively high management fees (around 2.5%) significantly reduce its attractiveness compared to competitors like BlackRock offering lower fees (around 0.25%). Many investors choose to transfer funds to lower-cost alternatives after the mandatory lock-up period ends, leading to massive redemptions for ETHE. This situation is similar to the massive fund outflows experienced by Grayscale's Bitcoin Trust GBTC after converting to an ETF.
The reasons for the massive outflows from Ethereum ETFs are complex, with fee competition, regulatory uncertainty, market performance, and competitive landscape all playing crucial roles.
Staking Uncertainty
The U.S. Securities and Exchange Commission's cautious, or even potentially delayed, attitude towards approving "Staking" revenues in Ethereum ETFs has removed a potentially attractive income source for many investors. Unlike directly holding ETH and participating in staking rewards, ETFs lacking this feature naturally lose their appeal.
Moreover, Ethereum's own controversies and market performance might have influenced investor sentiment, with the weak ETH/BTC exchange rate potentially disappointing some investors. Market concerns about Ethereum's scalability, competition from other Layer 1 blockchains, and its future upgrade roadmap may have reduced its short-term investment attractiveness.
Broader macroeconomic factors and market risk-averse sentiment might also prompt investors to reduce holdings of risk assets, including Ethereum ETFs.
Altcoin ETF's Blood-Sucking Effect
The continuous outflows and record-low AUM of Ethereum ETFs actually reflect potential market risks. Another potential risk is that as more cryptocurrency ETFs (such as SOL, XRP, LTC, etc.) are submitted or approved, institutional investor fund allocations might become further fragmented. This "fragmentation" of products could make it difficult for individual Altcoin ETFs to achieve sufficient AUM, thereby reducing their attractiveness to large institutional portfolios, creating a vicious cycle.
In the coming months, the SEC's final decision on spot Ethereum ETFs (especially those including staking) will be a market focus. If the regulatory attitude remains unclear or turns negative, it could further undermine investor confidence. Conversely, positive regulatory progress might reverse the current fund outflow trend. However, in the short term, the challenges facing Ethereum ETFs are real and severe.
Ethereum Might Retrace
In summary, the recent record-low AUM and continuous massive fund outflows of Ethereum ETFs are a signal that cannot be ignored. From the perspective of mature market funds, Ethereum's value might be overestimated. The recent Pectra upgrade initiated by Ethereum and the "RISC-V" reform initiated by Vitalik, whether they can meet market and community needs, still require a very long incubation period. In the short term, Ethereum's actions have limited impact on ETFs and cryptocurrency prices.
