Spot Ethereum ETF buyers' costs reach up to $3,500. Will institutional interest wane?

Bloomberg analysts point out that the current average purchase cost for Ethereum ETF investors is approximately $3,500, compared to the current market price of about $1,950, representing an unrealized loss of 45%.

The Bank of England has launched a pilot project called “Synchronous Laboratory” to explore the application of the pound in tokenized assets. Global regulators’ attitudes toward cryptocurrencies are diverging, and institutional investors are becoming more cautious when allocating digital assets.

Cost Dilemma

Bloomberg Intelligence data shows that the average purchase cost for spot Ethereum ETF investors is as high as $3,500. According to the latest data from the Gate platform on February 11, Ethereum’s current price is about $1,950.

This means that institutional investors entering the Ethereum market through ETFs are facing an average unrealized loss of about 40%.

This significant cost gap not only impacts investment returns but also changes institutional investors’ psychological expectations and behavior patterns. Bloomberg analyst James Seffert noted, “Since the sharp decline on October 10, Ethereum ETF investors have been consistently net sellers, with little to no dip-buying behavior.”

Institutional Allocation Logic

Despite the cost pressures, institutional investors have not completely halted their Ethereum allocations. According to a 2026 cryptocurrency investment portfolio institutional allocation guide, institutions typically adopt a core-satellite framework for their allocations.

In a typical institutional allocation, Bitcoin accounts for 60% to 80% as the core holding, Ethereum accounts for 15% to 25% as a secondary holding, and alternative coins account for 5% to 10% as satellite holdings.

This allocation framework indicates that institutional investors view Ethereum as a strategic position in the crypto ecosystem—second only to Bitcoin—rather than a short-term trading tool.

Market Sentiment Divergence

Current crypto market sentiment shows clear divergence. On one hand, data from Farside Investors indicates that Ethereum ETFs still saw a net inflow of $13.8 million on February 10, with core ETH funds attracting $13.3 million.

On the other hand, since the market sell-off in October last year, US-listed spot Ethereum ETFs have outflows of about $3.3 billion, causing assets under management to fall below $13 billion, the lowest since July last year.

The market fear index shows that current sentiment is in the “extreme fear” zone, with a score of 11 (out of 100), slightly up from 9 yesterday but still well below last month’s 27.

Staking Yield Appeal

For institutional investors facing high costs, staking Ethereum may become a way to alleviate pressure. According to Kean Gilbert, Head of Institutional Relations at the Lido ecosystem foundation, staking is no longer a niche feature for Ethereum investors but is becoming a key characteristic for institutions to gain crypto exposure.

Currently, about 29% of Ethereum’s total supply is locked in staking contracts, with an average staking yield of approximately 2.8% annualized. Gilbert predicts, “Looking ahead to 2026, fully staked exposure is expected to become a standard reference for Ethereum ETFs rather than an exception.”

This structural shift could reshape how institutions value Ethereum. Unlike some staking designs, fully staked products can offer investors higher actual yields while still meeting redemption requirements.

Derivatives Market Signals

Despite pressure in the spot market, Ethereum derivatives markets still show a certain level of institutional confidence. As of January 19, data indicates that Ethereum’s funding rate averages +0.40% (annualized 55.2%), suggesting that despite macroeconomic headwinds, the market maintains a long bias.

Ethereum’s open interest is approximately $23 billion, with Bitcoin and Ethereum combined open interest accounting for over 68% of total open interest, highlighting Ethereum’s role as a core asset in institutional portfolios.

However, Ethereum’s price has been fluctuating between $3,000 and $3,500, reflecting broader macroeconomic uncertainties and a complex mix of institutional capital flows.

Long-term Perspective and Short-term Challenges

Data firm Kaiko assesses, “The cryptocurrency market is in a broad downtrend, with declining total market cap, rising volatility, and weakening risk appetite occurring simultaneously.”

This market environment has a dual impact on institutional decision-making. On one hand, cost pressures and short-term losses may suppress new allocations; on the other hand, long-term investors may see current prices as strategic accumulation opportunities.

It is also worth noting that compared to traditional financial markets, the institutionalization of cryptocurrencies is still in its early stages. The participation of traditional financial institutions like BlackRock and Fidelity not only brings capital but also introduces longer-term investment perspectives and more mature risk management frameworks.

Structural Transformation

Ethereum’s institutionalization is not merely a function of ETF capital flows but a broader, multifaceted adoption that is redefining the structure of the crypto market.

As tokenization and decentralized finance expand, Ethereum’s role as a smart contract platform’s core value proposition may ultimately transcend short-term price fluctuations.

For institutional investors facing high costs, the key question may not be “whether” to continue allocating to Ethereum but “how” to do so more effectively. This includes considering staking strategies, product structure choices, and risk management tools.

Institutional allocation decisions in the crypto space are becoming more diversified, with more refined cost-benefit considerations and increased emphasis on risk management.

Summary

As of February 11, according to Gate data, Ethereum’s circulating supply is 120.69 million ETH, with a market cap of approximately $1.62 trillion, accounting for 9.80% of the market.

Despite the average cost pressure of $3,500 for ETF investors, staking Ethereum on the Gate platform can still generate yields. Currently, the USDT margin contract funding rate on Gate is +0.0086%, indicating that the derivatives market remains slightly bullish.

The market fear index still indicates “extreme fear,” but has risen from 9 to 11 since yesterday. This may suggest that market sentiment has reached a short-term bottom.