Spot Ether ETF Outflows Drop As Grayscale Flows Dry Up

Excluding the Grayscale Ethereum Trust, spot Ether ETFs hosted inflows exceeding $1.5 billion in their first two weeks of trade.

The tide appears to be turning for spot Ether ETFs as outflows from the Grayscale Ethereum Trust (ETHE) slow.

Data from Sosovalue shows spot Ether ETF hosting inflows for two of the last three days after a sustained run of outflows. The freshly launched funds hosted combined inflows of $33.7 million on July 30 and $26.7 million on August 1.

The positive flows coincided with outflows from ETHE falling sharply. After shedding between $327 million and $484 million during its first week of trade as an ETF, the Grayscale Ethereum Trust hosted outflows of between $133.3 million and $78 million over the past three days.

While the assets under management (AUM) of spot Ether ETFs are down $456.4 million since debuting on July 23, $2.06 billion left ETHE over the same period — meaning $1.6 billion has flowed into the other funds combined.

The heavy outflows from the Grayscale Ethereum Trust were likely driven by opportunistic traders who purchased ETHE shares at a discount realizing a profit on their trades. ETHE tagged an all-time low relative to Ether at a 47% discount in mid-2023.

ETH’s price is down 1.7% over the past 24 hours, according to The Defiant’s crypto price feeds.

Are spot Ether ETFs bullish or bearish?

Recent analysis from Amina Bank, a firm working to bridge traditional and digital finance, estimated that spot Ether ETFs will host between $3 billion and $4 billion worth of inflows over the next four months.

While the report noted that ETH perpetual funding rates trended sideways since the funds went live, “indicating moderate optimism” from traders, it concludes that the launch of Ether was a sell-on-the-news event.

“Despite the initial enthusiasm, Ethereum’s price remained relatively stable,” Amina said. “The market appears to be following a “buy the hype, sell the news” pattern, similar to what was observed during the Bitcoin ETF launch. For context, Bitcoin’s price dropped to $38,000 following its ETF debut but managed to break all-time highs just two months later.”

Samara Cohen, the CIO of ETF and index investments at BlackRock, the world’s largest asset manager and a spot crypto ETF issuer, described spot Ether ETFs’ debut week as “strong,” emphasizing the funds’ high trade volumes.

The BlackRock iShares Ethereum Trust (ETHA) is the fastest-growing Ether ETF with cumulative inflows of $712.9 million, followed by Fidelity’s FETH fund with $291 million and Bitwise’s ETHW with $288 million.

While many in the crypto community are bullish about what spot Ether ETFs could mean for the Ethereum and cryptocurrency sectors, Vitali Dervoed, the CEO and co-founder of Spark, believes tradfi is the primary beneficiary of crypto ETFs’ successes.

“An issue with the ETH ETF is that it isn’t bringing cash directly into crypto. It’s not boosting Ethereum’s price or increasing liquidity,” Dervoed said. “The more important focus should be on what will increase liquidity directly.”