As a seasoned researcher with over two decades of experience in the financial markets, I’ve witnessed countless product launches that either soared or flopped, leaving investors scratching their heads. The recent launch of Ethereum ETFs has been no exception, and it’s fascinating to observe how these investment products are navigating the market landscape.
After experiencing a downward trend for four consecutive days, Ethereum ETFs saw their initial positive day. A week following its debut, massive withdrawals from Grayscale’s Ethereum Trust (ETHE) overshadowed the impressive beginning of Ethereum-based investment instruments.
Ethereum ETFs Performance Outshined By Outflows
The proposal for Exchange Traded Funds (ETFs) based on Ether (ETH) sparked conversations about its potential demand and outcomes following its introduction. Several analysts predicted that these financial instruments might not match the performance of their Bitcoin-backed counterparts, attributing this to a lack of a “compelling story,” media coverage, and interest.
A number of industry experts, such as Katherine Dowling, Chief Compliance Officer at Bitwise, along with Anthony Pompliano, an American entrepreneur, predicted that Ethereum-based ETFs would only account for approximately 20% to 30% of the volume generated by Bitcoin-centric funds upon their launch. On their debut day, these investment products surpassed expectations, recording a trading volume of $1.05 billion, which equates to around 24% of what Bitcoin ETFs achieved on their first day. Additionally, they attracted $107.8 million in investments, despite experiencing $484 million in outflows from the ETHE fund.
On their second trading day, Ethereum ETFs ended with losses. The funds experienced a 5% decrease in trading volume on Wednesday and had a net outflow of $113.3 million. Despite these outflows, some analysts believe that the performance exceeded expectations, as the trading volume didn’t drastically decline after the initial excitement of the first day.
Based on data from Farside Investor, the daily outflows for Ethereum ETFs exceeded their positive net flows in the subsequent days. By July 29, these investment products were experiencing an average daily withdrawal of approximately $137.8 million and a total cumulative outflow of $440.1 million across all nine ETFs.
First Green Day Ends Negative Net Flow Streak
As a researcher, I observed an upturn in the trend that had been running for four consecutive days, which ended on July 30. This transformation was marked by the initial positive day for Ethereum Exchange-Traded Funds (ETFs) since their launch. The shift was primarily driven by a substantial inflow of $118 million into Blackrock’s iShares Ethereum Trust (ETHA). Consequently, these ETF funds collectively experienced a net positive flow of approximately $33.7 million on Tuesday.
Last Thursday, ETHE experienced a record-low net drain of $120 million since its initial exchange-traded fund launch. Furthermore, the fund witnessed a significant decrease in withdrawals following its $480 million loss on its debut day, indicating a potential slowdown in the decline that has drained around $1.84 billion from Grayscale as of July 30th. This trend suggests that ETHE might be on track to resume its positive run.
During the following days, ETHA emerged as the top performer among Ethereum ETH assets, bouncing back from a less-than-impressive second day. A week into its debut, the fund experienced an overall inflow of approximately $618.2 million.
According to Nate Geraci, President of the ETF Store, the ETHA exchange-traded fund has managed to rank among the top 15 funds in terms of inflow for newly launched ETFs this year. Interestingly, the four funds with the highest inflows are all Bitcoin spot ETFs.
According to Mads Eberhardt, a senior crypto analyst at Steno Research, it was noted that Bitcoin’s inflows into Blackrock’s ETHA and Fidelity’s FETH have been only a third of what they are for Bitcoin.
As a crypto investor, I’ve noticed that Eberhardt highlights an impressive track record, one that was accomplished even with some significant obstacles facing Bitcoin ETFs.
Despite relatively low interest in Ethereum ETFs, a less favorable month for launch, the knowledge that Grayscale’s Ethereum ETF needed to be drained promptly, and the fact that Ethereum had only half the market value of Bitcoin at the time of the ETF launch along with poorer liquidity, this event still took place.
In the end, the senior analyst anticipates that withdrawals from Ethereum spot ETFs will decrease by the end of this week. Once that happens, he predicts that the price can only go upwards from there.
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2024-08-01 09:12