Ethereum exchange-traded funds (ETFs), which debuted in the United States last week, have created a buzz in the cryptocurrency market with large inflows into the products.
According to a recent study a report According to CoinShares, the emergence of these spot ETFs has attracted $2.2 billion, marking a pivotal moment for Ethereum and its investors.
Ethereum ETFs Rise, What About Bitcoin?
Coinshares revealed that with the launch of Ethereum ETFs, we have not only seen a significant increase in capital, but we have also seen a 542% increase in Ethereum exchange-traded products (ETPs).
While the surge in demand reflects growing interest from investors seeking exposure to Ethereum through regulated financial products, James Butterfill, head of research at CoinShares, stressed that the figure remains “somewhat controversial.” Butterfill explained:
This figure is somewhat controversial as Grayscale funded its new Mini Trust ETF (the previous week) with capital from its existing closed-end fund (~$1 billion), which may help explain the steady stream of outflows in recent years.
Regardless, the introduction of these ETFs represents a significant achievement, as it is in line with broader market trends where investors are increasingly seeking diversified and secure investment channels within the crypto space.
However, not all the news is positive, as the digital asset market in general has seen mixed volatility. For example, Grayscale’s Ethereum Fund saw net outflows of $285 million despite the overall market recovery.
The broader cryptocurrency market has also been affected by these developments. According to Coinshares, Bitcoin continued to attract significant capital alongside Ethereum inflows, with $3.6 billion inflows over the past month.
This brings FDI inflows to an all-time high of $19 billion, supported by speculation about the US election and possible changes in Federal Reserve policy. James Butterfill noted in particular:
We believe that the US election comments about Bitcoin as a potential strategic reserve asset, and the increasing chances of a Fed rate cut in September 2024, are the likely reason for renewed investor confidence.
Furthermore, the CoinShares report delves into the consequences of these flows, highlighting a “record total inflow of $20.5 billion” across all digital assets for 2024. Trading volumes surged to their highest levels since May, further supported by the launch of Ethereum spot ETFs in the US.
BTC and ETH Market Performance
Following the record inflows into spot Bitcoin and Ethereum ETFs, their price performance has struggled to keep pace.
For example, despite Ethereum launching its ETF product last week, the coin showed a “news sell” price action, with Ethereum falling to $3,098 days after the news.
Although the asset is now trading above $3,300, it has yet to reach the level of optimism in spot ETF products. On the other hand, although Bitcoin also saw a drop to $64,000 days after the launch of the ETH spot ETF, the asset was quick to recover.
Bitcoin is currently trading at $68,850, a slight decline from its previous price of $69,907 recorded earlier today. It is worth noting that one of the notable factors attributed to the current bullish performance of Bitcoin price is the recent positive statement by former President Donald Trump at the Bitcoin 2024 conference.
These statements include removing Gary Gensler if elected president and creating a US government strategic national reserve of Bitcoin.
Featured image created using DALL-E, chart from TradingView