Ethereum lags behind Bitcoin, Nvidia, Meta, and others in risk-adjusted returns as investor interest wanes
Ethereum (ETH) has seen a marginal 0.1% increase on Wednesday as it faces higher outflows and diminishing trading volume across ETH-related products. This trend comes amidst data highlighting ETH’s recent underperformance when compared to various other prominent assets.
US spot Ethereum exchange-traded funds (ETFs) experienced outflows during their first trading session post the Labour Day holiday, with a notable $47.4 million net outflow recorded, marking the highest outflow in the past month according to Farside Investors data. The negative flows were primarily driven by significant outflows of $52.3 million from Grayscale’s ETHE. While other issuers saw no flows except for Fidelity’s FETH, which witnessed $4.9 million in inflows. These substantial outflows from ETH ETFs reflect a broader trend of decreasing interest from institutional investors in Ethereum.
The fluctuation from zero to negative flows across ETH ETFs further indicates a lack of demand from institutional players in the Ethereum market. Some attribute this poor performance to the absence of staking within the ETFs, while another group of investors, who do not consider staking yields, are also showing disinterest in ETH. Additionally, data from CCData reveals that Ethereum’s futures and options trading volume on the Chicago Mercantile Exchange (CME) saw a decline in August by 28.7% and 37.0% to $14.8 billion and $567 million, respectively — marking the lowest futures volume since December 2023.
Comparatively, Ethereum has exhibited lower risk-adjusted returns when pitted against assets like Nvidia, Gold, Meta, Bitcoin, and the NASDAQ-100 in 2024, as per Ecoinometrics data. This disparity in performance could be a contributing factor to the waning interest in ETH among investors.
Furthermore, historical data from Coinglass indicates the crypto market’s poor performance, including Ethereum, in Q3. Debate within the crypto community has also emerged regarding the declining revenue of the Ethereum blockchain following the implementation of blobs space in the Dencun upgrade, aimed at enhancing the scaling of Layer 2 networks.
From a technical analysis standpoint, Ethereum is currently trading around $2,450, with a potential decline towards $2,100 looming based on the movement along a key trendline. Past patterns suggest that ETH could experience a drop to the $2,100 support level in September before potentially rebounding, mirroring previous market cycles. However, a daily candlestick close above $2,817 could invalidate this projection.
The Relative Strength Index (RSI) and Stochastic Oscillator (Stoch) indicators are showing a slight bearish momentum for ETH in the short term, with a possible rally to $2,410 to liquidate positions worth $28.8 million.ETH’s performance in the coming weeks will be closely watched to assess its resilience amidst market challenges and investor sentiment shifts.
