Ethereum ETF Launch Attracts $2.2 Bln Influx, But There’s A Catch

CoinShares’ latest report reveals that the introduction of spot Ethereum ETFs last week injected a record $2.2 billion into the crypto market. It marks the largest weekly influx since December 2020. However, a significant selling pressure in products like Grayscale’s ETHE appears to have dampened the overall enthusiasm.

Grayscale Ethereum ETF Plays the Spoilsport

Within the first week of launch, the Grayscale Ethereum ETF (ETHE) saw outflows to the tune of $1.5 billion, or nearly 20% of the assets under management. BlackRock, Fidelity, Bitwise, and other ETFs witnessed a total of net inflows of $1.18 billion in the first week. Thus, the net outflows for the Ether ETFs in the first week stood at $338 million. However, the Ether ETP products worldwide saw trading volumes surge by 542%.

The new Ethereum ETFs after the first week saw US$1.18bn of inflows, although the massive outflows from incumbent Grayscale have meant a net outflow of US$338m. pic.twitter.com/LdjLcuQSmF

— James Butterfill (@jbutterfill) July 29, 2024

Also Read: Nate Geraci Calls Spot Ether ETFs A Success Despite Outflows

CoinShares notes that this is a similar situation to what happened in the Bitcoin ETF market within the first week of launch. Last week, the spot Bitcoin ETFs in the US registered inflows of $519 million, thereby taking the monthly inflows to $3.6 billion and 2024 inflows to $19 billion.

With flows into either direction, the inflows into digital asset investment products last week remain muted at $245 million, reported CoinShares. However, the Ethereum ETF launch helped the trading volumes to surge to the highest levels since May at $14.8 billion last week.

Recent price appreciation has increased total assets under management (AuM) to US$99.1 billion, with year-to-date (YTD) inflows reaching a record-breaking US$20.5 billion.

Ethereum Price Action Ahead

The Ethereum price is showing strength gaining more than 4.8% in the last 24 hours and trading closer to $3,400. As per data from CryptoQuant, the ETH open interest has surged by $1.5 billion in the last three weeks. With the surge in leveraged trading, liquidations become inevitable. CryptoQuant notes that one can expect greater volatility going ahead.

#Ethereum Open Interest data has increased by approximately $1.5 billion in the last 3 weeks

“As leveraged trading increases, liquidations become inevitable. This, in turn, brings high volatility. Therefore, I believe that OI is one of the data points that needs to be closely… pic.twitter.com/XTNz8sDuZU

— CryptoQuant.com (@cryptoquant_com) July 29, 2024

Also Read: Ethereum Price Poised for Rebound as Institutional Interest Hits Record High