Fidelity Commits $4.7 Million to Seed Upcoming Ethereum ETF


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Fidelity Investments, the world’s fourth-largest asset manager, has announced a big move ahead of the launch of its new Ethereum ETF. According to a regulatory filing, Fidelity intends to fund its next “Fidelity Ethereum Fund” with $4.7 million, indicating a strong belief in cryptocurrency.

Fidelity Unveils ETF Seeding

According to Fidelity’s S-1 registration form submitted on Friday, the total proceeds from the sale of the Seed Baskets were $4,749,975. On June 4, these proceeds were utilized to buy 1,250 ETH, giving the asset management 125,000 shares at $38 apiece. FMR Capital, a Fidelity affiliate, arranged this purchase.

Asset managers frequently seed ETFs with funds prior to their launch. This first capital injection provides liquidity to the fund’s early participants while also demonstrating the sponsor’s commitment and confidence in the offering. When Fidelity established its Bitcoin ETF earlier this year, it invested $20 million. Other big industry players, including as BlackRock and Bitwise, have seeded their funds with $10 million and $200 million, respectively.

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Competitive Landscape

This disclosure follows Bitwise’s latest registration statement, which announced that it has seeded its Ethereum ETF with $2.5 million. Pantera Capital Management has also shown an interest in buying up to $100 million worth of shares. Not to be outdone, BlackRock announced that it would contribute $10 million to its Ethereum fund, matching its debut investment in its Bitcoin ETF.

Fidelity and Others Aim Cost Efficiency 

While seeding amounts become evident, Franklin Templeton stands out as one of the few applicants to publish its Ethereum fund management fee, which is set at 0.19%. This charge is consistent with their Bitcoin offering, making it the most cost-effective option for market investors. In comparison, VanEck’s fee is slightly greater, at 0.2%. Experts expect other suppliers to unveil their cost structures as the debut date approaches. Bloomberg ETF analyst Eric Balchunas has mentioned July 2 as a possible launch date for these funds, pointing out that many are likely waiting for BlackRock to set the standard.

Performance Expectations 

In comparison to their Bitcoin equivalents, the market has mixed expectations for Ethereum ETFs’ success. Analysts largely believe that, while Ethereum ETF flows may not exceed those of Bitcoin, they are projected to outperform the average newly issued ETF. Balchunas previously predicted that Ethereum ETFs may draw roughly 20% of the flows that Bitcoin ETFs presently receive, which total $14.6 billion since January.

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K33 Research makes more positive forecasts, predicting that Ethereum ETFs will account for 28% of Bitcoin ETF flows, or $4 billion, within five months. Standard Chartered is even more optimistic, predicting that Ethereum ETFs will generate $45 billion in inflows within a year.

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