NewsletterWhy Are Ethereum Institutional Products Depleting Before ETF Launch?
Ethereum institutional products have recorded outflows in recent weeks despite the widespread anticipation of spot ETF listing in the United States. This reflects the state of the cryptocurrency market riddled with low sentiments amid persistent negative fluctuations since Bitcoin price declined below the $70,000 mark.
Crypto funds show some levels of institutional investment in the market with periods of inflows signifying bullish interest in products. Last week, the market saw a general decline with $30 million outflows with Ethereum dominating figures. Ethereum institutional products saw $60.7 million in losses last week wiping out inflows in other assets.
Putting it in perspective, Bitcoin funds netted $10 million in gains while multi-asset had $17.9 million leaving Ethereum in the red zone. The $60 million outflows recorded last week take monthly exits to $37 million and year-to-date flows at $25 million. This plunging state of Ethereum institutional products makes the assets the largest loser since August 2022 with numbers at $61 million.
Why Ethereum Institutional Products Declined?
Despite the momentum of spot Ethereum ETF approvals, institutional investors have temporarily moved away from the asset for various reasons. This has resulted in a drop in the assets under management (AUM) to $14.35 billion. Ethereum funds dropped because of the declining price of the asset amid future projections.
Most holders saw the lower price to impact gains and decided to restructure holdings. Like Bitcoin, which recorded a slight price correction in December, Ethereum toes a similar path although outflows are more profound. At press time, ETH trades at $3,404 falling from $3,700 last month. General poor market sentiments and reduced outflows from other funds are factors.
Bulls Take Positives
Ethereum bulls look to potential price highs after the listing which might roll out this summer. Last month, spot ETF applications pushed the asset’s price by 22% impacting other altcoins. These highs before recent corrections are flagged as key areas for institutional inflows. Overall, users point to the rapid growth of Bitcoin price following the approval of ETFs on Jan 11. BTC price soared to a new all-time high above $73,000.
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