Ethereum (ETH) has recently made headlines with the introduction of its new exchange-traded funds (ETFs). This development has drawn comparisons to Bitcoin (BTC) and its own ETF journey. As Ethereum’s ETFs enter their second week, they are showing signs of a pattern similar to what Bitcoin experienced following the approval of its ETFs. Notably, Ethereum ETFs are encountering significant outflows, with cumulative losses approaching $500 million.
Since the approval of Ethereum ETFs, there has been a notable resemblance between Ethereum’s price movements and those of Bitcoin following its ETF approval. Crypto analyst Croissant has pointed out that Bitcoin’s price initially dropped after its ETF approval. Specifically, Bitcoin’s price fell by 8% within the first two days and by 20% over the first two weeks. However, this decline was followed by a dramatic increase of nearly 90% in the months that followed.
Ethereum appears to be on a similar path. Since the introduction of its ETFs, Ethereum’s price has experienced a decline of about 6% as of July 30, 2024. Despite this drop, the initial trading period saw a surge in investment flows, with Bloomberg reporting $1.17 billion in flows by July 26. This surge indicates that while Ethereum’s short-term performance may be challenging, the long-term outlook might still hold potential for substantial gains.
As of July 29, 2024, Ethereum ETFs are grappling with substantial outflows, approaching the $500 million mark. This trend contrasts sharply with the inflow patterns observed in Bitcoin ETFs. On the same day, Bitcoin ETFs recorded a cumulative net inflow exceeding $17 billion, highlighting a stark difference in market behavior between the two cryptocurrencies.
One of the major contributors to the outflows in Ethereum ETFs is Grayscale’s Ethereum Trust (ETHE). On July 29, ETHE experienced net outflows amounting to $98 million, pushing the cumulative outflows for this fund to significant levels. The ETF’s trading price was reported to be trading at a discount of 0.17% to its net asset value (NAV). This discount reflects investor hesitation and has contributed to the fund’s underperformance.
Conversely, Grayscale’s Ethereum Mini Trust (ETH) has demonstrated a more positive trend, with net inflows of $4.9 million. The relatively lower fee structure of 0.15% for ETH compared to ETHE’s 2.5% fee could be a factor in its better performance.
In contrast to ETHE’s struggles, other Ethereum ETFs have shown resilience. BlackRock’s iShares Ethereum Trust (ETHA) attracted $500 million in cumulative net inflows during its first five days of trading. This was followed by Bitwise’s Ethereum ETF (ETHW) with $276 million and Fidelity’s FETH with $244 million. VanEck’s ETHV, Franklin Templeton’s EZET, Invesco’s QETH, and 21Shares’ CETH also recorded positive net inflows, albeit in smaller amounts.
However, some ETFs, including CETH and QETH, saw no flows on July 29, indicating potential market adjustments or investor caution.
The performance of Ethereum ETFs in their initial week has been less impressive compared to Bitcoin ETFs. When Bitcoin ETFs were introduced in January, there was a trading volume of $13.9 billion in the first week alone. This high trading volume underscored the strong initial interest and market engagement with Bitcoin ETFs.
In contrast, Ethereum ETFs saw a cumulative net inflow of $10.26 million in their first week. Although this figure is considerably lower than Bitcoin’s, it is essential to note that Ethereum’s annual rise of over 70% reflects its continued strength in the cryptocurrency market.
As Ethereum ETFs progress into their second week, analysts such as Mads Eberhardt anticipate that the outflows may begin to ease. The ETF market is known for its volatility, and initial declines are not uncommon. Historical trends suggest that while the beginning phases of ETF trading might be challenging, there is potential for a rebound.
Investors and market observers should keep an eye on ongoing developments and be prepared for fluctuations as Ethereum adjusts to its new position in the ETF market. The long-term outlook for Ethereum remains optimistic, with continued investment and market interest likely to drive future performance.
Ethereum ETFs are currently facing a challenging period marked by significant outflows and market adjustments. This pattern mirrors Bitcoin’s post-approval trajectory, where initial declines were followed by substantial gains. While the short-term outlook for Ethereum ETFs may be turbulent, the long-term prospects appear promising.
A finance graduate, Maheen Hernandez has been drawn to cryptocurrencies ever since Bitcoin first emerged in 2009. Nearly a decade later, Maheen is actively working to spread awareness about cryptocurrencies as well as their impact on the traditional currencies. Appreciate the work? Send a tip to: 0x75395Ea9a42d2742E8d0C798068DeF3590C5Faa5
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