- Ethereum ETFs faced significant outflows, raising concerns about investor interest and market performance.
- Bitcoin ETFs maintained their net inflows, despite recent weeks of continuous outflows.
As a seasoned researcher with over two decades of experience in the financial markets, I’ve seen my fair share of market trends and shifts. The current state of Ethereum ETFs versus Bitcoin ETFs is undeniably intriguing. While Bitcoin ETFs continue to attract investors, Ethereum ETFs seem to be struggling, with significant outflows since their launch.
It turns out that September hasn’t been kind to the Bitcoin ETF market. What’s even more troubling is the lackluster performance of Ethereum ETFs, which have faced difficulties since they began trading.
Ethereum ETF’s negative net flow
Based on the recent report from Farside Investors, there was a total withdrawal of approximately $6 million from the ETH Exchange Traded Fund on the 6th of September.
In contrast to other ETFs such as BlackRock’s ETHA and Fidelity’s FETH which have been receiving investments, Grayscale’s ETHE has experienced substantial withdrawals, causing the overall investment trend to become negative.
This raises a pressing question: Have Ethereum ETFs failed to attract the expected interest?
What’s behind this outflow streak?
To grasp the reasons behind investors’ hesitation towards Ethereum ETFs, it’s important to scrutinize various aspects.
Instead of earning a potential 1-5% yearly return by staking ETH, opting for an ETH spot ETF prevents you from taking advantage of that passive income source.
Over the last two years, the value of Ethereum relative to Bitcoin has halved, causing some previous Ethereum users to switch to Layer 2 platforms or cheaper Layer 1 blockchain networks as alternatives.
For instance, the $SOL/$ETH ratio has surged by 346%.
Unlike Bitcoin, which has a fixed supply of 21 million units, Ethereum is currently issuing more Ether than it destroys, leading to an increase in its total supply.
As an analyst, I’ve observed that recent improvements, such as the Proto-Danksharding update, have notably diminished transaction fees on Layer 2, leading to a decrease in Ethereum’s earnings for me.
Large amounts of funds leaving Grayscale’s ETHE are causing worry and contributing to a continuous outflow for the ETF, which is concerning.
It seems less and less probable that Ethereum’s price will jump to $4,000 as a result of Ethereum ETF launches.
Based on the most recent information from CoinMarketCap, Ethereum has seen a slight 0.66% rise but is still being traded at $2,321. This figure falls short of the anticipated levels.
Bitcoin ETF in comparison
In contrast, the Bitcoin ETF has seen a net inflow of $16.897 billion since its launch.
Even though Grayscale’s GBTC has seen investors withdrawing their funds, BlackRock’s ETF and other Bitcoin ETFs as a whole have managed to attract more investments than they’ve lost.
In the last fortnight, there has been a persistent stretch of daily outflows for Bitcoin Exchange-Traded Funds (ETFs), while occasional days of outflows were seen before this timeframe.
It’s yet unclear if the Ethereum ETF will shift from withdrawals to deposits, or if there will be ongoing withdrawal trends by investors.
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2024-09-09 20:08