Ethereum ETFs Launch with Strong Volumes but Fail to Ignite Significant Price Rally
The eagerly awaited launch of several Ethereum-based spot exchange-traded funds (ETFs) failed to spark a significant price rally for Ethereum (ETH). Despite substantial trading volumes and significant inflows on the first day, massive outflows from Grayscale overshadowed the positive momentum, preventing a notable price surge for Ether.
Ethereum ETFs Start Strong, but Grayscale Outflows Loom Large
Eric Balchunas, a senior ETF analyst at Bloomberg, shared on X (formerly Twitter), “DAY ONE in the books for Eth ETFs who did $1b in total volume, which is 23% of what the spot bitcoin ETFs did on their first day and ETHA did 25% of IBIT’s volume.” He further noted, “The gap between ETHE and The Newborn Eight is a healthy +$625m.”
Despite these healthy trading volumes, Ethereum's price only saw a marginal 1% increase yesterday. At press time, ETH stood at $3,437, marking a 0.4% decline over the past 24 hours. In contrast, Bitcoin (BTC) experienced a 1.6% decline, while other altcoins faced downward pressure, dropping between 4% and 10%.
Inflows and Outflows: A Mixed Bag
James Seyffart, another Bloomberg ETF expert, commented on the first day of inflows, “First full day of flows for the ETHness stakes are in. The Ethereum ETFs took in $107 million. BlackRock’s ETHA led the way with $266.5 million followed by Bitwise’s ETHW with $204 million. Very solid first day.”
However, the day was not without its challenges. The Grayscale Ethereum Trust (ETHE), which transitioned from a traditional trust to a spot ETF, saw substantial outflows amounting to $484.9 million, representing about 5% of the fund’s value. Eric Balchunas commented on this movement, “Damn. That’s a lot. Like 5% of the fund. Not sure The Eight newbies can offset w inflows at this magnitude. On flip side maybe its for best to just get it over with fast, like ripping a band aid off.”
The introduction of these ETFs follows a broader trend seen with the launch of similar Bitcoin ETFs in January, which also experienced a mix of inflows and significant outflows from the Grayscale Bitcoin Trust (GBTC). Despite the challenges, the Ethereum Mini Trust, another Grayscale product, reported $15.2 million in new inflows.
Varying Levels of Investor Interest Across Funds
Other notable Ethereum ETFs, such as Franklin Templeton’s EZET and 21Shares’ Core Ethereum ETF (CETH), saw inflows of $13.2 million and $7.4 million, respectively, indicating varying levels of investor interest across different funds.
A Complex First Day
Overall, the first day of trading for these Ethereum ETFs brought in significant volumes and a complex flow of funds. However, this did not translate into a significant price rally for Ethereum. As observed with Bitcoin, the Grayscale outflows for Ethereum seem to need to be cleared out before the ETFs can have a substantial impact on the price.
At press time, ETH traded at $3,442, reflecting a market that is still grappling with the large-scale outflows from Grayscale and the broader implications for the newly launched Ethereum ETFs. The future impact of these ETFs on Ethereum’s price remains to be seen, with investors and analysts closely monitoring the market dynamics in the coming days
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