Bitrabo Editorial
A parallel can be drawn between the historical trajectory of Spot Ethereum Exchange-Traded Funds (ETFs) and that of Spot Bitcoin ETFs as they both face a downturn in sentiment. The declining performance and reduced inflows of their respective ETFs mirror each other’s struggles, echoing the downward pressure experienced by the two leading cryptocurrencies in the market.
Challenges in the Path of Spot Ethereum ETFs
Analysts at the Woo X research platform point out that Spot Ethereum ETFs are following a trajectory similar to that of Bitcoin, indicating a prevailing bearish trend in the market. The launch of ETH spot ETFs on July 23 saw Ethereum’s price drop by 11%, plummeting from $3,500 to around $3,100 within a span of three days, reflecting the challenging conditions faced by these ETFs.
Besides the unfavorable market conditions, analysts from the research firm highlight a significant obstacle for ETH spot ETFs – the selling pressure exerted by the prominent asset management company, Grayscale, reminiscent of the hurdles BTC had encountered previously.
Following the introduction of Bitcoin spot ETFs, BTC witnessed a 20% price decline, falling from approximately $48,000 to $38,000 over a two-week period due to selling pressure from Grayscale’s BTC ETF, GBTC.
Subsequently, Bitcoin’s price surged from $38,000 to reach a record high of $73,000 as Grayscale’s GBTC selling pressure waned and capital inflows into the funds increased.
If Ethereum undergoes a similar scenario, Woo X predicts ETH could drop to $2,850. However, the extent of this impact will depend on Grayscale’s selling pressure and the overall net capital flowing into the spot ETH ETFs.
Negative Inflows Plague ETH Spot ETFs
Investor interest in spot Ethereum ETFs appears to be on the decline, with reports of negative outflows from these funds following Tuesday’s trading sessions, marking a significant withdrawal of funds from these products.
According to data from Farside Investors, an investment management company based in London, there was an overall outflow of $47 million from the spot Ethereum ETFs. Among the various funds, only Fidelity ETH ETF (FETH) ended the day with positive daily inflows of about $4.9 million.
On the flip side, other funds such as Blackrock’s Ethereum ETF (ETHA), Bitwise ETH ETF (ETHW), 21Shares ETH ETF (CETH), VanEck ETH ETF (ETHV), and Franklin ETH ETF (EZET) experienced zero inflows or negative trends. Grayscale ETH ETF (ETHE) saw another day of significant outflows totaling around $52.3 million.
This trend of outflows hints at investors pulling back from these products due to recent price movements in ETH and the overall volatility in the market, showcasing a cautious approach as they reconsider their exposure to the alternative cryptocurrency.