Ethereum ETFs Experience Back-to-Back Declines in Crypto Market – What’s the Cause?
Ethereum Exchange Traded Funds (ETFs) have recently experienced a downturn for the second day in a row, causing concern among investors and analysts in the cryptocurrency market.
On July 24, 2024, Ethereum ETFs saw a significant net outflow of $113.3 million, primarily driven by substantial sales from the Grayscale Ethereum Trust (ETHE). The Grayscale Ethereum Trust witnessed outflows of $326.9 million, impacting the overall performance of the new Ethereum ETFs.
Despite the negative trend, eight newly launched Ethereum ETFs managed to attract net inflows. The Fidelity Ethereum Fund (FETH) and the Bitwise Ethereum ETF (BITW) led the way with net inflows of $74.5 million and $29.6 million, respectively. However, these inflows were insufficient to counterbalance the massive outflows from the Grayscale Ethereum Trust.
The conversion of the Grayscale Ethereum Trust into a spot ETF enabled crypto investors to sell their shares more conveniently, leading to a surge in sales. Within just two days, the Grayscale Ethereum Trust experienced outflows of $811 million, representing over 9% of its total holdings.
The repercussions of these outflows were reflected in the price of Ethereum, which traded at $3,172 on July 24, marking a decline of more than 6.8% within 24 hours and 7.4% over the week. Analysts anticipate that Ethereum’s price will remain sensitive to the movements of ETF inflows and outflows in the near future. The current volatility in the crypto market, coupled with ETF activities, is expected to continue influencing Ethereum’s price.
The consecutive negative results of Ethereum ETFs underscore the challenges faced by these new financial products. Investors will need to closely monitor cryptocurrency market trends and ETF movements to navigate through this period of heightened volatility.
