TLDR
- Newly launched spot Ethereum ETFs in the US experienced significant outflows on their second day of trading.
- Grayscale’s Ethereum Trust (ETHE) saw a massive outflow of $326.9 million on the second day.
- Most new Ethereum ETFs showed positive inflows, with Fidelity and Bitwise leading the way.
- The Ethereum price dropped by about 7-8% amidst ETF outflows and a broader market sell-off.
- Total outflows from ETHE reached $811 million in the first two trading days.
The launch of spot Ethereum exchange-traded funds (ETFs) in the United States has had a mixed start, with notable outflows on their second day of trading.
According to data from Farside Investors, these ETFs saw net outflows ranging between $113 million and $133 million on July 24, just one day after their debut.
After a strong start on the first trading day, recording over $1 billion in trading volume and $106.6 million in net inflows, the second day brought a different narrative, with a significant portion of outflows originating from one source.
Grayscale’s Ethereum Trust (ETHE), recently transitioned to a spot ETF, experienced the largest outflows. On July 24, ETHE witnessed $326.9 million exiting the fund, contributing to a total of $811 million in outflows within its initial two days as an ETF.
The outflows overshadowed the positive inflows observed by most of the newly introduced Ethereum ETFs.
Despite the overall negative flow, seven out of the eight new Ethereum ETFs displayed positive inflows on their second day. Fidelity Ethereum Fund (FETH) led with $74.5 million in inflows, followed by Bitwise Ethereum ETF (BITW) with $29.6 million.
Other ETFs from WisdomTree, VanEck, and BlackRock also registered positive inflows, though in smaller amounts.
The outflows correlated with a significant decline in Ethereum’s price, with ETH falling by approximately 7-8% within 24 hours, trading around $3,170 at the reporting time.
This price movement coincided with a broader sell-off in both the cryptocurrency and traditional equity markets, as the S&P 500 closed down by 2.3% on July 24.
Analysts point out that Ethereum’s price action was more pronounced compared to Bitcoin, which only dropped by about 2.6% during the same period. This aligns with predictions that ETH’s price could be particularly sensitive to ETF inflows and outflows during the initial trading days.
The performance of Ethereum ETFs follows a similar trend as Bitcoin ETFs, which witnessed net outflows in six out of their first ten trading days. Many attributed those outflows to selling pressure from the Grayscale Bitcoin Trust ETF, akin to what is being observed with ETHE now.
It’s noteworthy that the conversion of Grayscale’s Ethereum Trust to an ETF eliminated a six-month lock-up period on investments, making it easier for existing investors to offload their holdings. This change likely contributed to the substantial outflows seen from ETHE in its initial ETF days.
Hot Take
ETFs are a significant addition to the crypto market, impacting asset prices and investor sentiment. The performance of Ethereum ETFs shed light on the volatility and sensitivity associated with these financial products. It’s crucial for investors to monitor these developments closely to make informed decisions based on market trends and price movements. Stay updated and remain vigilant in navigating the dynamic landscape of crypto investments!
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