The long-awaited launch of several ethereum-based spot exchange-traded funds (ETFs) failed to spark a significant rally in the price of ethereum (eth). Despite considerable trading volumes and large inflows into the “newborn” ETFs on their first day, Grayscale’s outflows have been too massive (once again) to push the price of Ether upwards.
ethereum ETFs start strong, but Grayscale is…
Eric Balchunas, senior ETF analyst at Bloomberg, x.com/EricBalchunas” target=”_blank” rel=”nofollow”>shared via x (formerly twitter), “DAY ONE on the books for eth ETFs that did $1B in total volume which is 23% of what spot bitcoin ETFs did on their first day and ETHA did 25% of IBIT’s volume.” He also noted that “The gap between ETHE and The Newborn Eight is a healthy +$625M.”
However, despite these healthy volumes, ethereum’s price only rose marginally by 1% yesterday. At press time, eth stood at $3,437, down 0.4% over the past 24 hours. In contrast, bitcoin (btc) price declined by 1.6%, and other altcoins also faced downward pressure, falling between 4% and 10%.
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James Seyffart, another Bloomberg ETF expert, x.com/JSeyff” target=”_blank” rel=”nofollow”>commented The first day of inflows, “The first full day of inflows for ETHness holdings has arrived. ethereum ETFs have raised $107 million. BlackRock’s ETHA led the way with $266.5 million, followed by Bitwise’s ETHW with $204 million. A very solid first day.”
Despite these positive inflows, the day was not without its challenges. The Grayscale ethereum Trust (ETHE), which switched from a traditional trust to a spot ETF, saw substantial outflows totaling $484.9 million, representing roughly 5% of the fund’s value. Eric Balchunas commented on this move: “Damn. That’s a lot. Like 5% of the fund. I’m not sure The Eight newbies can make up for inflows of this magnitude. On the other hand, maybe it’s best to just get this over with quickly, like ripping off a band-aid.”
The introduction of these ETFs is part of a broader trend following the launch of similar bitcoin ETFs in January, which also saw a mix of significant inflows and outflows from the Grayscale bitcoin Trust (GBTC). However, the ethereum Mini Trust, another Grayscale product, reported $15.2 million in new inflows.
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Other notable ethereum ETFs, such as Franklin Templeton’s (EZET) Core ethereum ETF (CETH) and 21Shares’ Core ethereum ETF (CETH), saw inflows of $13.2 million and $7.4 million, respectively, indicating varying levels of investor interest in the various funds.
Overall, the first day of trading for these ethereum ETFs generated significant volumes and a complex flow of funds, but did not translate into a significant rally in the ethereum price. As with bitcoin, it appears that Grayscale's outflows from ethereum need to be eliminated before the ETFs can have a significant impact on the price.
At the time of writing, eth was trading at $3,442.
Featured image created with DALL·E, chart from TradingView.com
