The price of ether fell in the wake of the launch of the spot ether ETFs on Tuesday, July 23. Ether (ETH) declined 7.82% in its first three days of spot ether ETF trading. Speculation regarding the price action includes a “sell-the-news” response as well as net negative flows in the spot ETFs.
It’s worth noting that bitcoin prices also declined in the wake of the spot bitcoin ETF launches in January. BTC prices dropped 14% between January 10 and January 23, according to Y-charts data.
Spot Ether ETF Outflows from ETH Cast Shadow Over Category
Significant outflows of over $1 billion, as of Friday’s close of trading, from the Grayscale Ethereum Trust (ETH), likely due to high fees, currently overshadow inflows into the remaining spot ether funds.
See also: “New Spot Ether ETFs: What Investors Need to Know”
“Ether prices have not seen much benefit since the spot ether ETF launch partly due to large outflows from the Grayscale Ethereum Trust (ETHE) weighing down net inflows for the group,” explained Roxanna Islam, CFA, CAIA, head of sector & industry research at VettaFi. “As the Grayscale outflows subside, there could be more positive pressure on ether prices similar to what we saw with the spot bitcoin ETF launch earlier this year.”
Interest in the remainder of the spot ether ETFs appears notable, albeit smaller than spot bitcoin ETFs at launch. Blackrock’s iShares Ethereum Trust (ETHA) came out on top for flows, bringing in $354 million as of 07/26/24. The Bitwise Ethereum ETF (ETHW) followed in second with nearly $250 million in flows. Rounding out the top three was the Fidelity Ethereum Fund ETF (FETH), with $180 million in flows, all according to Farside Investors.
See also: “Spot Ether ETFs’ Big Day: Looking Beyond Bitcoin”
ETH Prices Impacted by Broad Market Sell-Off
ETH prices were also caught in the tech rout this week and the resultant broad market sell-off. On mega-cap earnings disappointments, falling Magnificent Seven stocks saw investors dropping tech-centric and benchmark large-cap equity indexes in favor of cyclical stocks. The de-risking of portfolios often tends to catch cryptocurrencies in the net, given their high-risk nature. Ether suffered its largest single-day decline in over three months, dropping as much as 7% at one point in trading Thursday, reported Reuters.
It remains to be seen how ETH prices will move from here. However, there is something to be said regarding the impact of greater trading volume on price discovery. Within a speculative asset class like cryptocurrencies, it creates the potential for positive momentum. It’s worth noting that volume would most likely need to be maintained to sustain elevated prices without a fundamental catalyst to spark upward price momentum.
Increased trading volumes from spot ETFs appear to have benefited bitcoin prices for much of the year. BTC reached a new all-time high on March 14 of $75,830. Cryptocurrencies are notoriously volatile and a high-risk asset class. However, bitcoin has largely maintained its elevated prices for much of the year.
Ether prices suffered this week, and single fund outflows from Grayscale’s ETH ETF overshadowed net interest in the new spot ether ETFs. However, the future for both could be brighter from here. After all, much remains unknown about broad investor uptake in ether. With its unique and differentiated use cases from bitcoin, I wouldn’t be surprised if it finds a small, permanent home alongside bitcoin in some portfolios.
For more news, information, and analysis, visit the Crypto Channel.
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