Following their unexpected approval by the US Securities and Exchange Commission (SEC), ethereum spot ETFs (exchange-traded funds) became one of the hottest topics in the cryptocurrency space. However, cryptocurrency investment products seem to be failing to live up to expectations after a disappointing trading debut last week.
Grayscale is responsible for strong ethereum spot ETF outflows
On Friday, July 26, the newly launched ethereum Spot ETFs eth-spot” target=”_blank” rel=”noopener nofollow”>aware Another day of significant outflows, marking the third consecutive day of withdrawals from these products. The exchange-traded products, which were launched on Tuesday, July 23, saw a net outflow of approximately $341 in the opening week.
According to data from SoSoValue, the ethereum ETF spot market got off to a good start, recording a net inflow of approximately $106.8 million on the first day. Market experts considered this first-day performance to be a “solid start,” especially compared to the launch of bitcoin ETFs earlier in the year.
However, ethereum spot ETFs continued to have a “red day,” with over $133 million leaving the products on Wednesday, July 24. This was also followed by net outflows of $152 million and $162 million on Thursday, July 25 and Friday, July 26, respectively.
<img decoding="async" class="aligncenter wp-image-312397 size-large" src="https://technicalterrence.com/wp-content/uploads/2024/07/Ethereum-ETFs-get-off-to-a-slow-start-seeing-net.png" alt="ethereum Spot ETF” width=”980″ height=”502″ srcset=”https://bitcoinist.com/wp-content/uploads/2024/07/Screen-Shot-2024-07-28-at-03.27.37.png?w=2092 2092w, https://bitcoinist.com/wp-content/uploads/2024/07/Screen-Shot-2024-07-28-at-03.27.37.png?w=640 640w, https://bitcoinist.com/wp-content/uploads/2024/07/Screen-Shot-2024-07-28-at-03.27.37.png?w=768 768w, https://bitcoinist.com/wp-content/uploads/2024/07/Screen-Shot-2024-07-28-at-03.27.37.png?w=980 980w, https://bitcoinist.com/wp-content/uploads/2024/07/Screen-Shot-2024-07-28-at-03.27.37.png?w=1536 1536w, https://bitcoinist.com/wp-content/uploads/2024/07/Screen-Shot-2024-07-28-at-03.27.37.png?w=2048 2048w, https://bitcoinist.com/wp-content/uploads/2024/07/Screen-Shot-2024-07-28-at-03.27.37.png?w=750 750w, https://bitcoinist.com/wp-content/uploads/2024/07/Screen-Shot-2024-07-28-at-03.27.37.png?w=1140 1140w” sizes=”(max-width: 980px) 100vw, 980px” data-recalc-dims=”1″/>
Fountain: eth-spot” target=”_blank” rel=”noopener nofollow”>SoSoValue
It should be noted that Grayscale’s eth Trust exchange-traded fund, ETHE, in particular, has been responsible for a significant percentage of the capital outflow. On Friday, the fund saw a single-day outflow of over $356 million. From spot ethereum ETFs, Grayscale’s product has seen a cumulative net inflow of $1.51 billion.
Interestingly, the price of ethereum has suffered greatly following the launch of Ether ETFs. According to data from CoinGecko, the value of the “king of altcoins” has declined by more than 7% over the past week. At the time of writing, the price of eth is hovering around $3,248, reflecting a 1.1% drop over the past day.
New money inflow has less impact on eth
According to CryptoQuant’s latest report, new capital inflows, such as ETFs, have a less significant impact on ethereum than on bitcoin. This observation is based on a metric called the “realized capitalization multiplier.”
Recent data crypto-weekly-report” target=”_blank” rel=”noopener nofollow”>sample Every dollar of new money invested in bitcoin has the potential to increase btc's market cap by $5. Meanwhile, the effect is much smaller for Ether, whose market cap would only increase by $1.3 for every dollar invested.
<blockquote class="twitter-tweet” data-width=”500″ data-dnt=”true”>
By 2024, for every dollar invested in twitter.com/hashtag/bitcoin?src=hash&ref_src=twsrc%5Etfw” rel=”nofollow noopener” target=”_blank”>#bitcoin increased its market cap by $5, while for eth, it was only $1.3.
New money flows have a weaker effect on twitter.com/search?q=%24ETH&src=ctag&ref_src=twsrc%5Etfw” rel=”nofollow noopener” target=”_blank”>$Ether than bitcoin. image.twitter.com/CtAmmMVL8g
— CryptoQuant.com (@cryptoquant_com) twitter.com/cryptoquant_com/status/1816907303029010630?ref_src=twsrc%5Etfw” rel=”nofollow noopener” target=”_blank”>July 26, 2024
This revelation suggests that eth’s multiplier effect has been significantly smaller than bitcoin’s so far in 2024.
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The price of ethereum faces significant resistance at the $3,300 level on the daily timeframe | Source: ETHUSDT chart on x/reD1nU4Z/" target="_blank" rel="noopener nofollow">TradingView
Featured image from iStock, chart from TradingView
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