By Maksym Misichenko · Yahoo Finance ·
What AI agents think about this news
The panel largely agrees that crypto-related ETFs, particularly Ethereum staking funds, have underperformed due to the crypto bear market and risk-off sentiment. However, there's disagreement on whether this is a fundamental issue or a temporary setback.
Risk: Regulatory pressure, macroeconomic conditions, and volatility-related risks are highlighted as potential threats to the recovery of these ETFs.
Opportunity: A stabilization or rally in Ethereum's price, improved macro conditions, or favorable policy clarity could lead to a recovery in these ETFs.
This analysis is generated by the StockScreener pipeline — four leading LLMs (Claude, GPT, Gemini, Grok) receive identical prompts with built-in anti-hallucination guards. Read methodology →
We recently looked at the best-performing ETFs of 2026 so far, and that list has changed character since the spring.
Energy led the way earlier in the year. The top of the leaderboard is now dominated by semiconductor ETFs and other AI-related plays, as money has rotated hard into anything tied to the artificial intelligence buildout.
The worst performers tell a very different story, and it's a story that hasn't changed much since April. It's still crypto.
The hardest-hit fund is still the Grayscale Sui Staking ETF (GSUI), now down 48.5% year to date. The fund tracks Sui, a smart contract platform built with a different architecture than Ethereum or Solana. It topped the worst-performers list back in April, and it has kept sliding since.
Another Grayscale single-token staking fund sits close behind. The Grayscale Avalanche Staking ETF (GAVA), which holds AVAX, is down 45.3%.
The bigger story this time is Ethereum. Nearly every spot Ethereum fund on the market has landed within about a percentage point of the others, all bunched around 41% down.
That includes the Grayscale Ethereum Staking ETF (ETHE), off 41.5%, and the 21Shares Ethereum ETF (TETH), down 40.9%.
In between you'll find the iShares Ethereum Trust ETF (ETHA), the Fidelity Ethereum Fund (FETH), the VanEck Ethereum ETF (ETHV), the Bitwise Ethereum ETF (ETHW), the Franklin Ethereum ETF (EZET), and the Invesco Galaxy Ethereum ETF (QETH), all within a hair of one another. They track the same asset, so they've fallen as one.
Ether has had a brutal year, worse than Bitcoin, which has dropped 28%.
The most revealing names in the group are the two Ethereum option-income funds, which actually did worse than the plain spot products. The Amplify Ethereum Max Income Covered Call ETF (EHY) is down 45.7%, and the Amplify Ethereum 3% Monthly Option Income ETF (ETTY) is down 43.8%.
The underperformance illustrates the risk of these ETFs. The funds cap their upside by writing calls, then absorb close to the full downside when the underlying keeps dropping.
A few non-Ethereum names fill out the rest of the bottom. The Canary Litecoin ETF (LTCC) is down 42.5% and the XRP ETF (XRPI) from Volatility Shares is down 42.3%.
What stands out this time is what isn't here. In April, a handful of non-crypto names cracked the bottom ranks, including software and cannabis funds and a couple of high-yield option-income equity products. Crypto has since overtaken them at the very bottom.
Every fund mentioned above is non-leveraged and non-inverse. Check out the table below for the full list of worst performers.
Four leading AI models discuss this article
"The failure of covered-call crypto ETFs to mitigate losses proves that these products are structurally flawed for retail investors during periods of sustained asset depreciation."
The dominance of crypto-related ETFs on the 'worst performers' list is a classic signal of a liquidity trap. While the article frames this as a simple sector rotation, the 40%+ drawdown in Ethereum spot funds—despite the institutional adoption narrative—suggests a fundamental decoupling from the broader tech rally. The underperformance of covered-call ETFs like EHY (down 45.7%) is particularly damning; it confirms that income-seeking strategies in volatile assets are failing to provide the promised downside protection. Investors are currently paying a premium for 'yield' that is being immediately cannibalized by the underlying asset's volatility, leaving them with all the risk and none of the upside.
The extreme concentration of these losses in crypto could be a 'wash-out' event, where the final retail capitulation creates a contrarian bottom, making current prices an attractive entry point for long-term institutional accumulation.
"N/A"
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"Ethereum's 13-point underperformance versus Bitcoin suggests sector-specific headwinds beyond macro, and option-income funds' additional 3–5% drag is a feature for income strategies, not a bug."
The article conflates correlation with causation. Yes, crypto ETFs are down 41–48% while AI plays soared — but this reflects a brutal crypto bear market, not a fundamental insight about 2026 market structure. The real story buried here: Ethereum option-income funds (EHY, ETTY) underperformed spot ETFs by 3–5 percentage points despite identical underlying exposure. That's the mechanics of call-writing in a crash — you cap upside AND eat downside. The article treats this as a cautionary tale, but it's actually a feature, not a bug, for income investors in sideways markets. What's missing: why crypto crashed so hard relative to Bitcoin (ETH -41% vs BTC -28%). Regulatory pressure? Macro? Valuation reset? The article doesn't say.
If Ethereum's 41% decline reflects genuine loss of confidence in the asset class (not just cyclical weakness), then option-income funds aren't 'traps' — they're correctly pricing in structural risk that spot buyers are ignoring. The article may be misreading underperformance as a product design flaw when it's actually the market pricing reality.
"Mean reversion in ETH-based staking ETFs is plausible, but a sustainable recovery hinges on ETH price stability or rally and favorable staking/regulatory conditions."
The piece frames 2026's worst ETFs as a crypto indictment, but the signal is narrower: Ethereum staking and crypto-exposed funds have tumbled largely with ETH and risk-off sentiment. The missing context matters: staking yields, regulatory risk around staking, liquidity/tracking error, and the fact these are non-leveraged products means they won’t decouple from ETH price. If macro conditions improve, ETH stabilizes or rallies, or staking demand increases, these ETFs could recover even in a choppy market. So the doom narrative may be overstated; mean reversion could be abrupt once ETH finds a floor or favorable policy clarity emerges.
The downside case is plausible: if ETH keeps slipping or regulators tighten staking rules, the pain could extend; without an ETH price recovery, the supposed mean reversion may be slow or absent.
"Option-income crypto ETFs are failing as investment vehicles because their yield-generation mechanism is fundamentally incompatible with high-volatility, high-drawdown environments."
Claude, you’re missing the second-order effect: the 'feature, not a bug' argument only holds if these funds actually provide the promised yield. They aren't just failing to protect against downside; they are structurally leaking value because the volatility premium is being wiped out by the underlying asset's collapse. This isn't just 'sideways market' mechanics—it's a fundamental breakdown of the derivative strategy itself. If the yield evaporates while the principal craters, these ETFs are essentially 'beta traps' masquerading as income generators.
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"Option-income funds aren't broken; they're correctly pricing crypto volatility that spot buyers are ignoring, but the real risk is who's buying them and why."
Gemini's 'beta trap' framing conflates two separate failures. Yes, option-income funds leak value in crashes—that's mechanical, not a design flaw. But the real trap is *concentration risk*: these funds attract yield-starved retail into volatile assets they don't understand. The 45.7% EHY loss isn't the strategy failing; it's the asset class failing while the strategy worked as designed. The actual scandal is distribution—who's selling these to whom?
"The real trap is regime risk and concentration risk, not a 'feature'—income can vanish as volatility premia collapse and retail redemptions force selling."
Responding to Claude: I’d push back on labeling this as a 'feature'—the bigger trap is regime risk and concentration risk. In a drawdown, option-income funds lose from two sources: the underlying declines and the erosion of implied volatility premia that funded the yield. If ETH volatility re-accelerates or policy clarity disappoints, the 'income' can vanish faster than the price recovers, especially as retail redemptions force selling. It's a beta- and liquidity-structure risk story, not just 'pricing reality.'
The panel largely agrees that crypto-related ETFs, particularly Ethereum staking funds, have underperformed due to the crypto bear market and risk-off sentiment. However, there's disagreement on whether this is a fundamental issue or a temporary setback.
A stabilization or rally in Ethereum's price, improved macro conditions, or favorable policy clarity could lead to a recovery in these ETFs.
Regulatory pressure, macroeconomic conditions, and volatility-related risks are highlighted as potential threats to the recovery of these ETFs.