Ethereum ($ETH) exchange-traded funds (ETFs) have seen their first green day after four consecutive days of decline.
Following their launch, the significant outflows, primarily from Grayscale’s Ethereum Trust (ETHE), overshadowed the initial success of Ethereum-based investment products.
The approval of these ETFs on 23 July had sparked discussions about their potential demand and performance.
Many experts anticipated that Ethereum ETFs would not match the success of their Bitcoin-based counterparts due to a lack of media attention and demand.
Industry figures, including Bitwise’s Chief Compliance Officer, Katherine Dowling, and entrepreneur, Anthony Pompliano, estimated that Ethereum ETFs would achieve only 20%-30% of the volume of Bitcoin ETFs.
On their first day, Ethereum ETFs performed remarkably, aligning with expert expectations. They recorded a trading volume of $1.05 billion, approximately 24% of what Bitcoin ETFs achieved on their launch day, along with $107.8 million in inflows.
This was despite a significant $484 million net outflow from ETHE.
Subsequent decline and volatility
After the initial success, Ethereum ETFs faced challenges. By the second day, the funds had a 5% drop in volume and a negative net flow of $113.3 million.
Analysts noted that despite the outflows, the performance was better than expected, as the volume remained relatively stable.
According to data from Farside Investors, Ethereum ETFs saw consistent outflows in the following days.
By 29 July, the average daily outflow was $137.8 million, with a total outflow of $440.1 million across all nine ETFs.
This trend highlighted the inherent volatility in the cryptocurrency market, with Ethereum spot ETFs recording a notable outflow of $77.2 million on 31 July.
Soon after, different Ethereum ETFs showed varied results. The broader market trends also influenced Ethereum ETF movements.
Spot Bitcoin ETFs had net inflows of only $299,000, with BlackRock’s IBIT and Grayscale Bitcoin Mini Trust performing the best.
Fidelity’s FBTC saw an outflow of $31.57 million, and other Bitcoin ETFs, such as Ark and 21Shares’ ARKB, along with Bitwise’s BITB, also recorded outflows.
Ending the negative streak
On 30 July, spot Ethereum ETFs recorded their first positive net flow since their launch, ending a four-day negative streak.
Led by Blackrock’s iShares Ethereum Trust (ETHA), which saw $118 million in inflows, the funds registered a positive net flow of $33.7 million.
ETHE had a negative net flow of $120 million, the lowest since the ETFs’ launch, indicating a potential slowdown in outflows.
ETHA emerged as the best-performing Ethereum ETF, with a total positive net flow of $618.2 million a week after its launch.
The President of ETF Store, Nate Geraci, highlighted that ETHA has positioned itself in the top 15 inflows of all ETFs launched this year.
Senior crypto analyst, Mads Eberhardt, from Steno Research noted that Blackrock’s ETHA and Fidelity’s FETH have seen significant inflows despite several disadvantages compared to Bitcoin ETFs.
These included less media attention, a less favourable launch period, and the market’s awareness of Grayscale’s short-term ETF liquidation.
Eberhardt believes that outflows from spot Ethereum ETFs will subside by the end of the week, potentially leading to a positive trend.
He anticipates that spot Ether ETFs could manage assets worth up to $10 billion within their first year of trading.
The Head of Investment Research at Sygnum Bank, Katalin Tischhauser, has now projected Ether ETFs to reach $5 to $10 billion in inflows in their first year.
She suggested that strong inflows could drive Ether prices up to $6,000, as the market has not yet priced in potential positive surprises.
Tischhauser explained that significant inflows would enhance market sentiment and create demand shocks due to limited $ETH supply.
