Following an unexpected approval by the US Securities and Exchange Commission (SEC), Ethereum ETFs have become one of the biggest stories in the crypto space. However, the crypto investment products appear to be falling short of expectations after a disappointing first trading session last week.
Grey is responsible for large outflows of Ethereum ETFs
On Friday, July 26, the newly launched Ethereum Spot ETFs were launched. It was published. Another day of significant outflows, marking the third consecutive day of withdrawals from these products. The exchange-traded products, which launched on Tuesday, July 23, recorded net outflows of around $341 in the opening week.
According to data from SoSoValue, the Ethereum spot ETF market got off to a high note, recording net inflows of around $106.8 million on the first day. Market experts have called this first-day performance a “strong start,” especially compared to the launch of Bitcoin ETFs earlier in the year.
However, this was followed by a red day for Ethereum ETFs, with over $133 million exiting 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.
source: Soso Value
It’s worth noting that Grayscale’s Ethereum ETF, ETHE, was responsible for a large portion of the outflows. On Friday, the fund saw single-day outflows of over $356 million. Since the ETFs, Grayscale’s product has recorded cumulative net inflows of $1.51 billion.
Interestingly, the price of Ethereum has suffered greatly since the launch of Ethereum ETFs. According to data from CoinGecko, the value of the “king of altcoins” has dropped by more than 7% in the past week. As of this writing, Ethereum is trading at around $3,248, reflecting a 1.1% drop in the past day.
New money inflow has less impact on ETH
According to a recent report from CryptoQuant, 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 capital multiplier.”
Latest data Offers Every new dollar invested in Bitcoin has the potential to increase Bitcoin’s market cap by $5. Meanwhile, the impact is much smaller for Ethereum, where Ethereum’s market cap will only increase by $1.3 for every dollar invested.
In 2024, every dollar invested in #Bitcoin The market cap of ETH has increased by $5, while it was only $1.3.
New money inflows have a weaker impact on Ethereum From Bitcoin. pic.twitter.com/CtAmmMVL8g
— CryptoQuant.com (@cryptoquant_com) July 26, 2024
This revelation suggests that ETH’s multiplier effect has been much lower than Bitcoin’s so far in 2024.
The price of Ethereum faces significant resistance at the $3,300 level on the daily timeframe | Source: ETHUSDT chart on TradingView
Featured image by iStock, chart by TradingView