Comprehensive Analysis of Ethereum ETF Market Performance

Since the launch of the Ethereum spot ETF on the US stock market in July 2024, the performance of this financial instrument has always stirred the nerves of the cryptocurrency market. As of May 2025, the market landscape of the ETH ETF shows characteristics of intensified differentiation, regulatory gamesmanship, and intertwined technological upgrades. This article will analyze the listing performance and future trends of the ETH ETF from four dimensions: capital flow, regulatory dynamics, technical support, and market expectations.

How is the Ethereum ETF performing?

The performance of the spot ETF is weak.

Although the Ethereum spot ETF provides a compliant channel for traditional investors, its capital attractiveness is far inferior to that of the Bitcoin ETF. Data shows that as of May 2025, the total assets under management (AUM) of the Ethereum spot ETF is approximately $8.5 billion, which is only 7.5% of the Bitcoin ETF during the same period (approximately $113 billion). The core reasons include:

• Lack of staking rewards: The ETH held by the ETF cannot participate in Ethereum staking, causing investors to incur an additional management fee of 0.25%-2.5%, while missing out on an annualized staking reward of 3%-5%.
• Ecological volatility risk: Ethereum possesses both "smart contract platform" and "digital asset" attributes, and its price is significantly influenced by ecological applications such as DeFi and Layer 2. By 2025, the mainnet Gas fees are expected to decrease by 95% compared to peak levels, and on-chain activities will be diverted to competitors like Solana, further undermining market confidence.

Inverse Leveraged ETFs Become the "Dark Horse"

In stark contrast to spot ETFs, ETFs that short Ethereum with 2x leverage become the best-performing financial products in 2025. The ProShares UltraShort Ether ETF (ETHD) and the T Rex 2X Inverse Ether Daily Target ETF (ETQ) are up 247% and 219%, respectively, during the year, reflecting the market's pessimistic expectations for ETH's short-term trend. This phenomenon resonates with the technical decline in the price of Ethereum, which has fallen by 54% this year, especially as the ETH/BTC trading pair has repeatedly fallen below key support levels, falling to around 0.017 in April this year, close to a record low.

At a macro level, the policy trends of the Trump administration may inject variables into the ETH ETF. On one hand, its promoted "Digital Asset Strategic Reserve" plan could include ETH as a reserve asset, benefiting long-term demand; on the other hand, tariff policies and the risks of trade wars are exacerbating market volatility, leading to increased risk aversion among institutional funds. In addition, institutions like BlackRock are lobbying the SEC to approve spot ETFs with staking features, which, if successfully implemented, could significantly enhance the attractiveness of the products.

Can the Ethereum Pectra upgrade turn the tide?

On May 7, 2025, Ethereum completed the Pectra upgrade, which is the most important technical iteration following Dencun, covering 11 improvement proposals, focusing on optimizing staking efficiency and Layer 2 scalability:

• Validator incentive enhancement: EIP-7251 allows single-node staking of over 32 ETH, attracting institutions to increase participation;
• User Experience Innovation: EIP-3074 supports transaction batching and Gas payment, lowering the user threshold;
• Cross-chain interoperability breakthrough: ERC-7683 standardizes cross-chain intentions, promoting Layer 2 liquidity integration.

Although the upgrade has not yet reflected in the price in the short term, its long-term boosting effect on the ecosystem is highly anticipated. If Layer 2 chain activities recover and feed back into the mainnet revenue, the capital inflow for ETH ETFs may see a turning point.

Future Outlook for ETH ETF

Short-term risks and opportunities coexist

• Technical pressure: If the bearish flag pattern of the ETH/BTC trading pair breaks the support level, it may trigger further selling.
• Capital Reflow Potential: CME plans to launch XRP futures ETF on May 19, which may indirectly benefit ETH if it revitalizes the overall crypto ETF market.

Long-term ecological value reassessment

Ethereum's core competitiveness still lies in its developer ecosystem and the depth of institutional collaborations. The Layer 2 layouts by traditional giants like Sony and Deutsche Bank, as well as the ETH reserves of the Trump family's DeFi project, all support long-term value. If the Pectra upgrade pushes the number of DApps to over 100,000 and the TVL returns to the ten billion dollar level, ETH ETFs may see a reevaluation of value.

Resonance between Regulation and Product Innovation

If the SEC approves spot ETFs in the second half of 2025 and allows staking features, it may replicate the fund siphoning effect of Bitcoin ETFs. BlackRock's iShares Ethereum Trust (ETHA), with its low management fee of 0.25% and the custodial advantages of compliant trading platforms, is expected to become a leader.

The listing performance of the ETH ETF reflects the transformation of the cryptocurrency market from "conceptual hype" to "ecological value". In the short term, regulatory uncertainty, the effectiveness of technological upgrades, and macroeconomic fluctuations will continue to dominate price movements. In the long run, Ethereum's irrefungible nature in the field of Web3 infrastructure and the continuous innovation of institutional-grade financial products may inject new momentum into its ETF market.

Despite the negative returns of the Ethereum ETF so far this year, its billions of dollars in net inflows and continued market attention show that investors remain confident in the long-term layout. With more ETF varieties approved, institutional demand released, and Ethereum network upgrades to promote ecological efficiency, ETH ETFs are expected to usher in wider adoption and more mature trading structures in the coming years. Investors should continue to pay attention to macro policy changes, fee adjustments and product innovations to optimize their allocation to this emerging asset class.

Author: Icing, Gate.io researcher *This article only represents the author's views and does not constitute any trading advice. Investment carries risks, and users should make cautious decisions. *The content of this article is original and the copyright belongs to Gate.io. If you need to reprint it, please indicate the author and source; otherwise, legal responsibility will be pursued.