Ethereum ETFs See Largest Outflows Since July: Is Waning Institutional Demand Hurting ETH?

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Ethereum (ETH) exchange-traded funds (ETFs) posted the largest outflows since July 2024, with $79.2 million leaving the market on Monday, according to data from SoSoValue.

Ethereum ETFs Continue To Underperform

Despite the highly-anticipated and strong start for Ethereum ETFs in July 2024, the latest crypto-based ETFs have, thus far, failed to sustain institutional interest. The latest data from crypto ETF tracker SoSoValue shows that ETH ETFs witnessed a daily total net outflow of $79.2 million on September 23.

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Upon closer inspection, it appears that the bulk of the outflows originated from Grayscale’s Ethereum Trust (ETHE), which saw $80.6 million exiting the fund, bringing its cumulative net total outflow to $2.85 billion. In contrast, Bitwise’s ETHW posted net inflows of $1.3 million, propelling its cumulative net total inflows to $320.3 million.

It’s worth noting that the latest exodus of funds from Ethereum ETFs is the fourth-largest in terms of value since their inception on July 23, 2024. The total net assets (TNA) of Ethereum ETFs stand at $7.2 billion, compared to $57.9 billion for Bitcoin (BTC) ETFs.

The continued underperformance of Ethereum ETFs relative to Bitcoin ETFs does not inspire much confidence in ETH’s future price potential. The ETH/BTC trading pair provides clarity, as the ratio is currently trading at levels it last witnessed way back in April 2021. ETH has erased all the gains against BTC it recorded over the past three years.

The ETH/BTC trading pair is back to levels last seen in 2021 | Source: ETHBTC on TradingView.comThe recent subpar performance of ETH against BTC isn’t surprising since the latter recorded a new all-time-high (ATH) value of $73,737 in March 2024, while the former has yet to breach its ATH of $4,878 recorded in November 2021.

Challenges may lie ahead for ETH ETFs as speculation grows about the potential launch of ETFs for competing cryptocurrencies, such as Ripple’s XRP. Grayscale recently unveiled the first XRP trust in the U.S., paving the way for a future potential XRP ETF.

Analysts Confident About Ethereum’s Comeback

Ethereum’s challenges have not dampened the optimism several digital assets analysts shared toward the second-largest cryptocurrency by market cap. Near the launch of Ethereum ETFs, research firm ASXN predicted that the funds could attract monthly inflows ranging from $800 million to $1.2 billion.

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Similarly, cryptocurrency exchange Bitwise’s Matt Hougan recently dubbed Ethereum the “Microsoft of blockchains,” indicating confidence in the leading smart contract blockchain protocol. Hougan added that ETH could see a trend reversal to the upside in Q4 2024. ETH trades at $2,610 at press time, down 1.7% in the last 24 hours.

ETH trades at $2,610 on the weekly chart | Source: ETHUSDT on TradingView.com