Ethereum ETF Inflows Outpace Bitcoin
Spot Ethereum ETFs experienced a surge in investment this week, significantly outperforming their Bitcoin counterparts. Data from SoSo Value and Farside Investors reveals $420 million in inflows for ETH ETFs, compared to $173 million for BTC ETFs.
Driving Factors Behind Ethereum ETF's Success
- CME ETH Basis Trade: Coinbase analysts, David Han and David Duong, attribute the ETH ETF outperformance to institutional investors capitalizing on the CME ETH basis trade. This arbitrage strategy involves buying ETH in the spot market and simultaneously shorting it in the futures market, profiting from the price difference (basis). This week, the CME ETH basis trade offered a higher yield than its BTC counterpart, making it a more attractive proposition for institutions.
- Increased ETH Futures Open Interest: Further supporting this analysis, ETH Futures open interest surged from 354,000 ETH to 1.13 million ETH between November 2024 and early February 2025. This contrasts sharply with the stagnant inflows observed in CME BTC Futures during the same period.
The chart below from Coinbase illustrates the significant yield difference between CME ETH and BTC basis trades during this period, showcasing a 16% yield for ETH compared to approximately 10% for BTC.
Source: Coinbase
Short-Term Outlook
While the current trend is positive for Ethereum ETFs, Coinbase analysts caution that ETH's price might remain subdued in the short term due to negative funding rates and competition from Solana.
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