Spot Ethereum ETFs Face Early Challenges, $341M Outflows Despite Strong Debut (2024)

On July 23, spot Ethereum ETFs officially began trading, just months after receiving approval from the SEC. The debut was promising, with nine new ETFs attracting over $106 million in net flows. However, the initial excitement is giving way to some early hurdles.

Let’s delve into the initial impact of these ETFs and what might be next for Ethereum in this evolving market.

It’s Been a Promising Start!

The launch of spot Ethereum (ETH) ETFs on Wall Street created a significant buzz, with $108 million flowing into these funds. Yet, this figure constitutes only 16% of the $655 million that poured into Bitcoin (BTC) ETFs during a similar timeframe. When excluding outflows from Grayscale’s ETHE and GBTC conversions, Ethereum’s share of ETF inflows leaps to 79%.

Despite the strong start, Ethereum ETFs have encountered some obstacles. After an initial surge, these ETFs have seen three consecutive days of net outflows, totaling $341.8 million. This trend, while disappointing, was somewhat anticipated based on historical patterns observed with Bitcoin ETFs, which also experienced early outflows before stabilizing.

Comparing the Challenges: Bitcoin vs Ethereum

The early difficulties with Ethereum ETFs mirror the initial experiences of Bitcoin ETFs, which faced a similar pattern of initial outflows followed by recovery. However, the scale of outflows from Ethereum ETFs is notably larger than those seen with Bitcoin’s GBTC at its launch. This discrepancy is attributed to ETHE trading at net asset value during conversions, unlike GBTC, which was still trading at a discount when its spot ETFs were introduced.

Despite a strong start, demand for other Ethereum products, such as BlackRock’s ETHA and Fidelity’s FETH, has diminished. These ETFs struggled to offset the significant withdrawals from ETHE. Consequently, the data from the first four days of trading reveals a net outflow of $341.8 million from the spot Ethereum ETFs.

ETH Price Analysis

Following the launch, Ethereum’s price exhibited some volatility but has since stabilized between $3,200 and $3,300. This price action mirrors Bitcoin’s experience with its ETF launch. Historically, Bitcoin saw a price recovery after an initial period of fluctuation—a phenomenon known as the “ETF effect.

Despite a 3.15% correction over the past week, Ethereum has rebounded with a 4.84% increase in the last day. Currently trading at $3,366, Ethereum has reached a 24-hour high of $3,384.53 and boasts a trading volume of $11.076 billion. If the positive market sentiment persists, Ethereum could build on this momentum, break through its resistance level at $3,700, and potentially aim for $4,000.

As the dust settles, the true impact of Ethereum ETFs on the market will become clearer.

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