BlackRock accelerates Ethereum (ETH) acquisition; more than $500M flow into ETFs in the past days

More than $500M flowed into Ethereum ETFs in the past days, showing renewed consumer interest. BlackRock and Fidelity were the leading buyers, both increasing their ETH balances to a new record. 

BlackRock and Fidelity became the top buyers of Ethereum (ETH) as demand for ETF investments increased. The two funds added $500M in new ETH inflows, shows on-chain data. ETH inflows increased in the past couple of weeks, surpassing the slower buildup of buying over the past months. 

Ethereum ETFs have seen almost constant netflows since November 21, with some neutral days, but no significant outflows. The past week saw record activity, drawing a total of $1.29B into the funds. Ethereum ETFs also experienced renewed exuberance after the US elections, which boosted both crypto and traditional markets. 

Demand for ETH rallied after the announcement of an altcoin season. Inflows also made a series of records, with a peak of $428.44M in daily inflows as of December 5. Since then, inflows have remained near their upper range, and have become more sustainable even on slower days.

For traditional investors, ETH is still expected to outperform, especially with a prolonged bull market in 2025. ETH is seen as potentially underperforming, with investors attempting to benefit in case the asset starts to catch up rapidly. 

On-chain ETH holdings grow vertically

The known wallets of BlackRock expanded to over 820K ETH held on-chain. The pace of inflows also accelerated in the past 10 days, resembling the initial hype after the ETF launch in the summer of 2024. The ETH inflows coincide with active Bitcoin (BTC) ETF buying, as the bull market hype drives investors into both assets.

Fidelity also saw highly active ETH inflows within days, increasing its holdings to 114.63K ETH. The inflows arrived after months of negligible net growth, and coincide with the recent ETH breakout. 

ETH prices just under the $4,000 level coincide with renewed spot buying and ETF inflows. The BlackRock ETHA fund expanded to $3.55B in assets under management, while Fidelity grew to $1.56B. 

Grayscale remains the biggest ETH holder, despite restructuring in the past months. The Grayscale Ethereum Trust still holds $5.56B in ETH, while the Grayscale Ethereum Mini Trust holds $1.75B. Grayscale still controls most of the invested ETH, though growth may come from funds catching up to the current market leader. 

Grayscale also decreased its selling, leading to the more optimistic picture of new ETH inflows. Reasons for the renewed interest include a roll-over from BTC funds. 

Can ETH ETFs expand with staking?

One unique feature of Ethereum holdings is they can be safely staked for passive income. ETFs have a requirement to keep their assets liquid and available for drawdowns, so most funds are only passively holding ETH. 

Some possibilities have been mentioned for creating an ETF that would also allow staking. Currently, ETFs hold relatively smaller amounts of ETH in comparison to validators and some liquid staking protocols. ETFs are more agile in raising funds, however, and can bring more ETH for staking. 

Due to the more conservative nature of the funds, their ETH holdings may never make it into the DeFi ecosystem. Various forms of liquid staking may pose counterparty risk for hacks and exploits, in addition to having longer withdrawal periods or deliberate delays. 

Demand for ETF shares does not reflect ETH sentiment from crypto insiders. The Ethereum chain remains controversial and still has multiple technicalities under discussion. Ethereum continues to serve as a base layer for its L2 ecosystem. While indispensable, the chain is also not producing net inflows, as most apps and L2 retain their earnings. 

At the same time, Ethereum has enough fee burns to move closer to a sound money asset. Ethereum inflation decreased to 0.12%, from a peak at 0.6%. As a result, only 3,569 new ETH is produced in a week, after months of adding more than 17K ETH to the supply. With more ETH locked in DeFi, staking or DEX liquidity, the token is also experiencing potential scarcity.