Ethereum ETFs Aren’t Failing, Yet ETH Struggles To Climb

• Ethereum ETFs have seen $458.95 million in cumulative net outflows since launching on July 23, 2024.
• The Grayscale Ethereum Trust (ETHE) is the only fund with negative net outflows.
• Excluding ETHE, Ethereum ETFs have seen a combined inflow of over $2 billion.

Ethereum (ETH) exchange-traded funds (ETFs) have been on a solid losing streak, but that’s just how it looks on paper.

This sentiment is echoed by those who anticipated a bull run on ETH, just as there was with Bitcoin (BTC) after its ETF launches. But ETH ETFs aren’t failing, so why is the price of ETH stagnating?

Ethereum ETF Performance

On July 23, 2024, 8 funds launched spot Ethereum ETFs in the U.S., and the inflow rates were lackluster at best. In fact, the first two weeks of ETH ETFs were characterized by sizeable and persistent outflows.

The first day of trading saw a rather healthy $106.78 million in net inflows, but this was quickly followed by four days of net outflows totaling almost $550 million.

Looking at data provided  by SoSoValue, this trend continued until the third week of trading, when ETH ETFs recorded positive weekly flows for the first time. After that, the outflows returned. That said, the daily outflows were significantly lower than that of the first two weeks, recording losses in the tens of millions instead of $100 million and above.

Throughout this time, observers would be forgiven for thinking that ETH ETFs were unattractive to investors, given the rates of exits. But, it’s worth noting that just one Ethereum ETF is leading these losses, namely Grayscale.

Grayscale’s Influence

The perception that Ethereum ETFs are failing to capture investor attraction like Bitcoin ETFs isn’t unfounded, but it is a stretch to say that they are “failing” by any means.

A vast majority of the negative flow results stem from the Grayscale Ethereum Trust (ETHE). On its very first day of trading, $484.11 million exited the fund, and outflow rates continued every day.

Late into its second week of trading, ETHE’s outflows ceased being in the hundreds of millions. But the outflows remained persistent. The fund has seen just one day of neutral flows and 22 days of outflows.

To date, ETHE has seen a cumulative net outflow of $2.52 billion. If you combine the net inflows of every other fund and exclude ETHE from the list, Ethereum ETFs have seen just over $2 billion in cumulative net inflows.

So why does the price of ETH seem to be suppressed?

Ethereum Reacts

After launching on Jan. 11, 2024, Bitcoin ETFs caused the price of BTC to skyrocket to new all-time highs and are largely responsible for continuing to prop up these new prices.

However, BTC ETFs launched in a similar fashion, and the Grayscale Bitcoin Trust (GBTC) has also performed terribly, shedding almost $20 billion from its fund since launching.

This didn’t seem to have a detrimental effect on the price of BTC. So, are these poor flow results negatively affecting ETH?

In short, probably not.

Ethereum made most of its gains following the launch of BTC ETFs as now, all eyes are on Ethereum ETFs.

As rumors began to spring up and funds began filing applications with U.S. regulators, hype drove ETH from a price of around $2,300 to a year-high of $4,046.

The price then tumbled a bit, reaching a low of $3,036.

But in late May, rumors of ETH ETFs being launched “within weeks” sent ETH back up towards $4,000. Then, on July 23, ETH ETFs launched, and the price of ETH immediately began to decline.

ETH Price

The early-August crypto market bloodbath didn’t help matters either, as liquidations across every major crypto market and sector were piling up.

This caused BTC to lose hundreds of millions from its market cap. Ethereum lost around $100 million from its market cap, with a large portion of its losses coming from decentralized finance (DeFi) liquidations.

Ethereum’s price will also struggle, as its supply has increased by over 197,000 ETH (+$500 million) since March 2024, inevitably placing downward pressure on its price.

Despite the price drop, demand for Ethereum ETF was solid.

To many, this is an indicator of Ethereum’s long-term success.

Remember, Ethereum ETFs launched during a distinct period of market uncertainty and have performed pretty well despite all the bearish market sentiment.

So, optimistically, Ethereum could have a serious breakout later this year if global dynamics and macroeconomic conditions stabilize.

At worst, ETH will continue trading sideways until the “next” market development.

About the Author

Eddie Mitchell

Eddie has been writing news and content primarily for crypto news and industry players over the past seven years. With an eye for the bigger picture, Eddie prefers to investigate the broader implications of a story, as well as explore the weird and wonderful world of crypto. He believes blockchain has already changed the world, but observes the space overall with a skeptical and adoring eye.

See more

[email protected]