Ethereum (ETH) exchange-traded funds (ETFs) have experienced their largest outflows since July 2024, with $79.2 million exiting the market on Monday, according to data from SoSoValue.
Ethereum ETFs Continue To Underperform
Despite the highly anticipated and strong start for Ethereum ETFs in July 2024, the latest crypto-based ETFs have, thus far, failed to sustain institutional interest. The latest data from crypto ETF tracker SoSoValue reveals that ETH ETFs witnessed a daily total net outflow of $79.2 million on September 23.
Grayscale’s Ethereum Trust (ETHE) Sees Major Outflows
Upon closer inspection, it appears that the bulk of the outflows originated from Grayscale’s Ethereum Trust (ETHE), which saw $80.6 million exiting the fund. This brings its cumulative net total outflow to $2.85 billion. In contrast, Bitwise’s ETHW posted net inflows of $1.3 million, propelling its cumulative net total inflows to $320.3 million.
Historical Context and Comparative Performance
It’s worth noting that the latest exodus of funds from Ethereum ETFs is the fourth-largest in terms of value since their inception on July 23, 2024. The total net assets (TNA) of Ethereum ETFs stand at $7.2 billion, compared to $57.9 billion for Bitcoin (BTC) ETFs. The continued underperformance of Ethereum ETFs relative to Bitcoin ETFs does not inspire much confidence in ETH’s future price potential.
The ETH/BTC trading pair provides clarity, as the ratio is currently trading at levels it last witnessed back in April 2021. ETH has erased all the gains against BTC it recorded over the past three years. The recent subpar performance of ETH against BTC isn’t surprising since the latter recorded a new all-time-high (ATH) value of $73,737 in March 2024, while the former has yet to breach its ATH of $4,878 recorded in November 2021.
Future Challenges for ETH ETFs
Challenges may lie ahead for ETH ETFs as speculation grows about the potential launch of ETFs for competing cryptocurrencies, such as Ripple’s XRP. Grayscale recently unveiled the first XRP trust in the U.S., paving the way for a future potential XRP ETF.
Analysts Confident About Ethereum’s Comeback
Ethereum’s challenges have not dampened the optimism shared by several digital assets analysts toward the second-largest cryptocurrency by market cap. Near the launch of Ethereum ETFs, research firm ASXN predicted that the funds could attract monthly inflows ranging from $800 million to $1.2 billion.
Similarly, cryptocurrency exchange Bitwise’s Matt Hougan recently dubbed Ethereum the “Microsoft of blockchains,” indicating confidence in the leading smart contract blockchain protocol. Hougan added that ETH could see a trend reversal to the upside in Q4 2024. ETH trades at $2,610 at press time, down 1.7% in the last 24 hours.
Conclusion
In conclusion, while Ethereum ETFs are currently underperforming and facing significant outflows, analysts remain optimistic about Ethereum’s long-term potential. The market dynamics may shift, especially with the potential introduction of ETFs for other cryptocurrencies. Investors and stakeholders will need to keep a close watch on these developments to make informed decisions.
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