Bitrabo Editorial
Spot Ethereum ETFs have seen their first positive day following a series of negative days since their launch. Despite initial massive outflows, mainly from Grayscale’s Ethereum Trust (ETHE), the introduction of ETH-based investment products had a notable start.
Ethereum ETFs Facing Challenges Amid Outflows
The launch of spot Ethereum (ETH) ETFs brought about discussions concerning their demand and performance post-launch. Experts speculated that these investment products might not reach the same levels as their Bitcoin-based counterparts due to reasons such as a lack of a clear narrative, media attention, and demand.
Some prominent figures in the industry like Bitwise’s CCO Katherine Dowling and entrepreneur Anthony Pompliano predicted that Ethereum ETFs might only achieve about 20% to 30% of the performance seen with BTC-based funds. Despite these projections, the funds showed a strong start by meeting expectations on their first day, with $1.05 billion in volume and $107.8 million in inflows.
However, following a strong start, Ethereum ETFs recorded a decrease in volume and negative net flow, indicating challenges. Despite the outflows, analysts noted that the performance was better than expected as the volume did not significantly drop after the initial frenzy.
Based on data from Farside Investor, ETH ETFs experienced more outflows than inflows in the subsequent days, with an average daily outflow of $137.8 million and a total outflow of $440.1 million across all nine ETFs by July 29.
Positive Turnaround After Negative Streak
On July 30, Ethereum ETFs broke a four-day negative streak by witnessing their first positive day since the launch. Led by Blackrock’s iShares Ethereum Trust (ETHA) with $118 million in inflows, the funds saw a positive net flow of $33.7 million on that day.
ETHE experienced its lowest negative net flow of $120 million since the spot ETFs were launched. Additionally, the fund saw a significant 75% decline in outflows compared to the $480 million loss recorded on the first day. This decline suggests a slowdown in Grayscale’s outflows and the potential for a positive trend in the future.
Meanwhile, ETHA emerged as the best-performing Ethereum ETF after recovering from a disappointing second day. A week after its launch, the fund had a total positive net flow of $618.2 million.
According to ETF Store President Nate Geraci, ETHA has made its mark by ranking among the top 15 inflows of all ETFs launched this year, with the top four inflows being spot bitcoin ETFs.
Senior crypto analyst Mads Eberhardt emphasized that despite various disadvantages compared to Bitcoin ETFs, ETHA and Fidelity’s FETH have managed to attract one-third of the inflows their Bitcoin counterparts received.
This has happened despite less overall attention on Ethereum ETFs, a suboptimal launch month, the market’s awareness of Grayscale’s short-term Ethereum ETF draining strategy, and Ethereum having half the market cap of Bitcoin upon ETF launch with even poorer liquidity.
Eberhardt believes that outflows from Ethereum ETFs will diminish by the end of the week, leading to a positive trajectory moving forward.