The long-awaited launch of several Ethereum-based ETFs failed to spark a major rally in the price of Ethereum. Despite the “nascent” ETFs’ high trading volumes and large inflows on their first day, Grayscale’s outflows were massive (again) to push the price of Ether higher.
Ethereum ETFs Start Strong, But Grayscale…
Eric Balchunas, Senior ETF Analyst at Bloomberg, subscriber Via X (formerly Twitter), “First day in the history books for Eth ETFs to hit $1B in total volume, 23% of what spot Bitcoin ETFs made on their first day and ETHA made 25% of IBIT volume.” He also noted that “the gap between ETHE and The Newborn Eight is +$625M.”
However, despite these healthy volumes, Ethereum’s price only rose by 1% yesterday. At the time of writing, Ethereum was trading at $3,437, down 0.4% in the past 24 hours. In contrast, Bitcoin (BTC) was down 1.6%, and other altcoins were also facing downward pressure, falling between 4% and 10%.
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James Seyfrit, another Bloomberg ETF expert, Hang on “First full day of inflows for ETHness staking. Ethereum ETFs took in $107M. BlackRock’s ETHA led the way with $266.5M followed by Bitwise’s ETHW with $204M. Very strong first day.”
Despite these positive inflows, the day was not without its challenges. The Grayscale Ethereum Trust (ETHE), which has transitioned from a traditional fund to a spot ETF, saw a massive outflow of $484.9 million, representing about 5% of the fund’s value. “Oh my god. That’s a lot. Like 5% of the fund. I’m not sure the eight newbies could make up for that amount of inflows. On the other hand, it’s probably best to get it over with quickly, like ripping off a band-aid,” commented Eric Balchunas of the move.
The launch of these ETFs is part of a broader trend following the launch of similar Bitcoin ETFs in January, which also saw a mix of large inflows and outflows from the Grayscale Bitcoin Trust (GBTC). However, another Grayscale product, the Ethereum Mini Trust, reported new inflows of $15.2 million.
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Other notable Ethereum ETFs like Franklin Templeton’s (EZET) and 21Shares’ Core Ethereum ETF (CETH) saw inflows of $13.2 million and $7.4 million respectively, indicating varying levels of investor interest across different funds.
Overall, the first day of trading for Ethereum ETFs brought significant volume and complex inflows of funds, but it did not translate into a significant rise in the price of Ethereum. As with Bitcoin, it appears that Grayscale outflows from Ethereum will need to be cleared before the ETFs can have a significant impact on the price.
At the time of publishing this report, ETH was trading at $3,442.
Featured image created using DALL E, chart from TradingView.com