Key Points
- Ethereum ETFs are experiencing significant outflows, causing concerns about investor interest.
- Bitcoin ETFs continue to see net inflows despite recent weeks of continuous outflows.
Ethereum ETFs are currently facing a significant outflow, which has raised concerns about investor interest and market performance.
This is in stark contrast to Bitcoin ETFs, which have maintained their net inflows, despite recent weeks of continuous outflows.
Ethereum ETF’s Negative Net Flow
The month of September has been particularly challenging for the Bitcoin ETF market.
However, the underperformance of Ethereum (ETH) ETFs, which have struggled since their inception, is even more worrying.
Latest data from Farside Investors reveals that the ETH ETF experienced a net outflow of $6 million on September 6th.
While other ETFs like BlackRock’s ETHA and Fidelity’s FETH have seen inflows, Grayscale’s ETHE has experienced such significant outflows that it has pushed the net flow into negative territory.
This raises the question of whether Ethereum ETFs have failed to attract the expected interest.
Reasons Behind the Outflow Streak
Several factors could be contributing to investors’ reluctance to invest in Ethereum ETFs.
Unlike staking ETH, which can yield a 1-5% annual percentage yield, holding an ETH spot ETF limits this passive income opportunity.
Furthermore, the Ethereum-to-Bitcoin ratio has fallen 50% over the past two years, leading many former ETH users to migrate to Layer 2 solutions or alternative, more cost-effective Layer 1 blockchains.
For example, the SOL/ETH ratio has surged by 346%.
Ethereum has also become inflationary, as it now issues more ETH than it burns, unlike Bitcoin (BTC)’s capped supply of 21 million BTC.
Recent updates, like the Proto-Danksharding upgrade, have further reduced Layer 2 transaction fees, decreasing Ethereum’s revenue.
Significant outflows from Grayscale’s ETHE are raising concerns and adding to the ETF’s negative net flow.
The anticipated surge in ETH’s price to $4,000 following the launch of Ethereum ETFs appears increasingly unlikely.
According to the latest update from CoinMarketCap, ETH, despite a 0.66% increase, is currently trading at $2,321—significantly below expectations.
In contrast, the Bitcoin ETF has seen a net inflow of $16.897 billion since its launch.
Despite Grayscale’s GBTC facing outflows, BlackRock’s ETF and other BTC ETFs have collectively achieved positive net inflows.
While there have been occasional days of outflows, it’s only in the past two weeks that Bitcoin ETFs have faced a sustained period of continuous outflow.
Therefore, it remains to be seen whether the Ethereum ETF will flip from outflows to inflows, or if investors will continue to observe a persistent outflow trend.
