Grayscale Ethereum Trust Sheds $327 Million in a Day as ETFs See Mixed Flows

The much-anticipated launch of Ethereum spot ETFs has failed to ignite the market as expected, with Grayscale’s Ethereum Trust ETF bearing the brunt of investor skepticism. 

Wednesday saw a staggering $133 million net outflow from ETH spot ETFs, with the Grayscale Ethereum Trust (ETHE), which was converted to a spot ETF on Tuesday, hemorrhaging $327 million, according to data from SoSo Value. 

While the firm’s newly created Grayscale Ethereum Mini Trust (ETH) managed to attract $46 million in inflows, and Fidelity’s FETH drew in $74 million, the overall picture for Ethereum ETFs remains clouded.

In contrast, Bitcoin spot ETFs demonstrated greater resilience. 

Total net inflows for Bitcoin ETFs on July 24 reached $44.5 million, with BlackRock’s IBIT ETF leading the charge with $65.9 million in inflows. Grayscale’s GBTC, however, experienced an outflow of $26.2 million.

These ETF movements come against a backdrop of market volatility for Ethereum and Bitcoin.

As of now, the Ethereum price has settled at $3,171, down 8.5% over the last 24 hours, after having seen a low of $3,156.69 earlier in the day. Its 24-hour trading volume stands at $22.4 billion. 

Things aren’t looking much better for Bitcoin. The Bitcoin price is currently sitting at $64,200, down 3.2% over the last 24 hours, having hit a low of $63,565.53 earlier in the day.

Singapore-based crypto trading firm QCP Capital noted the underwhelming market response to the Ethereum ETF launch, writing in a note yesterday that the highly anticipated ETH spot ETF commenced trading, “yet the expected market fireworks failed to materialize.”

However, the firm’s analysts wrote that they maintain a positive outlook for ETH, drawing parallels to Bitcoin’s post-ETF trajectory.

In a note to Decrypt, Konstantin Shulga, CEO of Finery Markets, an institutional infrastructure provider, emphasized the broader implications saying that the approval marks a significant shift in regulatory sentiment, signaling the irreversible institutionalization of crypto. 

“We saw a significant BTC rally following the launch of BTC ETFs. Anticipation for ETH, the second-largest digital asset, is high, especially in the current bullish market. Research indicates Ethereum’s higher sensitivity to global ETP flows compared to Bitcoin. However, we should remain patient and account for volatility and potentially inflated expectations,” he said.

Valentin Fournier, an analyst at BRN, provided context to Grayscale’s outflows, stating, “Grayscale is seeing enormous outflows from its Ethereum Trust ETF, with 8% of its $10 billion being sold over two days of trading.” 

Despite this, Fournier highlighted the strong trading volume as a positive sign of ongoing interest.

But Fournier wrote that he’s still optimistic about Bitcoin. “Since the recent push toward $68,500, Bitcoin’s price has dropped 6%,” he wrote. “However, its dominance in the crypto market rose (+2%). This means that despite high selling pressure and successive losses over the last 4 days, it is performing much better than the other cryptocurrencies.”

Edited by Stacy Elliott.