Ethereum spot ETFs experienced a net outflow of $98.3 million on July 29, marking the fourth consecutive day of outflows. The Grayscale Ethereum Trust (ETHE) saw a single-day outflow of $210 million, while the Grayscale Ethereum Mini Trust (ETH) attracted $4.9 million in inflows. Other ETFs, such as BlackRock’s iShares Ethereum Trust (ETHA) and Fidelity’s Ethereum Fund (FETH), had mixed results with inflows ranging from $24.8 million to $58.2 million. This comes amidst a period of investor withdrawals from high-fee legacy products converted to exchange-traded funds.
During the first week of trading, nine ETFs holding Ethereum experienced outflows totaling $340 million. This was attributed to investor withdrawals from high-fee legacy products converted to exchange-traded funds. Despite these outflows, eight new Ether ETFs approved by the U.S. Securities and Exchange Commission amassed $1.17 billion over four trading days. Funds by BlackRock, Bitwise, and Fidelity attracted substantial inflows of $442 million, $266 million, and $219 million, respectively. Grayscale’s Ethereum Trust saw a loss of $1.5 billion, with investors viewing the conversion as a strategic exit point.
The digital asset investment landscape continues to draw substantial interest, with inflows maintaining a positive trajectory for the fourth consecutive week. In the previous week, the sector saw inflows of $245 million, bringing year-to-date inflows to a record $20.5 billion. Bitcoin products, in particular, have continued to attract significant investments. Last week, Bitcoin saw inflows of $519 million, bringing month-to-date inflows to $3.6 billion and year-to-date inflows to an unprecedented $19 billion. The surge in investment is attributed to the political climate in the United States, with the potential consideration of Bitcoin as a strategic reserve asset.
Investors appear to prefer lower-cost options, as evidenced by Grayscale’s launch of the “Ethereum Mini Trust” with a fee of 0% compared to the primary trust’s 2.5% fee. This new product attracted $91 million in its initial week, indicating a shift towards more cost-effective options. The launch of these ETFs coincided with a decline in Ether’s price, which fell by 4.6% to around $3,331 since trading began on July 23. Despite this dip, Ether remains up by approximately 46% for the year, maintaining its position as the second-largest cryptocurrency by market capitalization after Bitcoin.
The surge in investment in digital assets is also influenced by expectations of a potential rate cut by the Federal Reserve in September 2024. Former President Donald Trump’s positive remarks on Bitcoin have also invigorated the market dynamics, signaling a shift in the narrative surrounding the cryptocurrency’s future. Shubh Varma, CEO and Co-founder of Hyblock Capital, noted that such a pro-crypto stance from a major political figure was almost unimaginable just two years ago. This positive sentiment, along with other factors, has contributed to the continued inflows into digital asset products, particularly Bitcoin.
