Ethereum ETF Inflows Revive As Grayscale’s ETHE Outflows End, What’s Next?

Spot Ethereum ETFs have witnessed a resurgence in inflows after weeks of subdued activity, driven by a significant shift in the market. Moreover, Grayscale’s ETHE, one of the most prominent Ether ETFs, marked a pivotal moment by ending its 19-day streak of outflows on Monday, August 12.

Additionally, this development comes as the broader market for ETH ETFs struggles to gain momentum in the wake of Bitcoin ETFs. The BTC ETFs have consistently outpaced Ether counterparts in attracting investor interest.

Ethereum ETF Performance

Ethereum, the second-largest crypto by market capitalization, recently recovered from levels below $2,000, sparking optimism that it could breach the $3,000 mark. However, this optimism has been dampened as the bullish momentum faded, leaving the price unable to reach critical resistance levels. The failure to sustain upward movement has raised concerns among investors about the short-term bearish outlook for Ethereum.

However, the ETH ETF weekly inflows last week were positive. As of the latest data, the cumulative inflows for Ether ETFs reached just $5 million, marks a shift from the outflows recorded since last Wednesday. Despite this, there are signs of recovery, particularly with the end of outflows from Grayscale’s ETHE.

Grayscale’s ETHE ETF, which has been under pressure with consistent outflows, saw a break in its downward trend. On Monday, August 12, the ETF reported zero flows, signaling a potential shift in investor sentiment. This marked the end of a 19-day streak of outflows and could be a turning point for the Ethereum ETF market.

Other ETH ETFs, including those from Fidelity and Bitwise, have also shown signs of recovery, albeit modest. Fidelity recorded inflows of $4 million, while Bitwise attracted $2.9 million. However, BlackRock’s ETHA, the biggest player in the Ethereum ETF space, reported zero flows on the same day.

On the contrary, data from Farside Investors indicates that funds flowing into ETHA have reached $901 million, nearing the $1 billion milestone. Bloomberg analyst Eric Balchunas highlighted it as a major achievement for a newly launched crypto ETF.

Comparison with Bitcoin ETFs & Macroeconomic Context

While Ether ETFs have struggled, Bitcoin ETFs have maintained a more stable inflow pattern. On Monday, BTC ETFs attracted $27.8 million in inflows, outpacing the ETH investment products. However, the BTC ETF market is not without its challenges.

Last week, these Bitcoin funds experienced significant outflows, totaling $167 million. This outflow was driven by investor concerns over a potential U.S. recession and uncertainty surrounding future Federal Reserve interest rate decisions. Nonetheless, analysts expect BlackRock’s IBIT to surpass Satoshi Nakamoto‘s BTC holdings soon.

Also, despite the challenges, BTC ETFs continue to dominate the market, outpacing Ethereum counterparts in both inflows and overall investor interest. Meanwhile, the revival of inflows into Ethereum ETFs, particularly with Grayscale’s ETHE ending its outflow streak, could be a catalyst for renewed interest in ETH.

The cumulative inflows into ETHA reaching $901 million are also a positive sign, according to QCP Capital analysts. However, the market remains cautious, particularly with the upcoming U.S. Consumer Price Index (CPI) data, which could influence Federal Reserve rate decisions.

According to analysts from QCP Capital, investors are closely watching inflation numbers, with the odds of a 50 or 25 basis point rate cut in September now evenly split. This uncertainty may continue to weigh on both Bitcoin and Ethereum markets, making the near-term outlook for ETFs in both cryptocurrencies uncertain.

On the flip side, the good news is that U.S. Producer Price Index (PPI) data came in at 2.2%. The slowing inflation suggests a dovish stance from the Fed. Moreover, experts have hinted at a 75 bps Fed rate cut in case of favorable inflation data.