The recently launched Spot Ethereum ETFs have not seen a smooth debut, as institutional investors have shown mixed reactions towards these funds. There are observations provided by the crypto research firm, 10x Research, shedding light on the reasons behind this lack of enthusiasm from investors.
Institutional Understanding Lacking
According to 10x Research, institutional investors have not embraced the Spot Ethereum ETFs due to a lack of complete understanding about Ethereum. The report authored by Markus Thielen highlighted that Wall Street investors tend to avoid investing in assets they don’t comprehend fully.
Shortly after the approval of the Spot Ethereum ETFs in May, Bloomberg analyst Eric Balchunas pointed out the challenge faced by the issuers in simplifying Ethereum’s use case in a manner similar to Bitcoin being known as “digital gold.”
10x Research reiterated this concern, mentioning the struggle faced by the ETF issuers in articulating Ethereum to traditional investors. Despite BlackRock defining ETH as a “bet on blockchain technology,” this description has not resonated with investors.
The research firm also noted the lack of marketing efforts by the Spot Ethereum ETF issuers, which has contributed to the overall lack of awareness about these funds. This, coupled with the absence of a clear and simple narrative for Ethereum, is one of the reasons behind 10x Research’s bearish outlook on ETH.
Outflows Impact ETF Performance
Soso Value data revealed that the Spot Ethereum ETFs experienced a net outflow of $152.3 million on the third day of trading, primarily driven by Grayscale’s Ethereum Trust (ETHE) recording a net outflow of $346.22 million.
Despite a positive start on the first trading day, with a net inflow of $106.78 million, these ETFs encountered cumulative net outflows of $178.68 million since commencement. The outflows from ETHE have put selling pressure on ETH, potentially leading to short-term price declines until demand for other Spot Ethereum ETFs picks up to counterbalance the outflows from Grayscale.
