The month of September has not been kind to Bitcoin ETFs, but even more troubling are the struggles faced by Ethereum ETFs since their introduction.
Decline in Net Flow for Ethereum ETFs
Recent data from Farside Investors reveals that on September 6th, the ETH ETF witnessed a net outflow of $6 million.
While ETFs like BlackRock’s ETHA and Fidelity’s FETH have seen inflows, Grayscale’s ETHE has experienced significant outflows, turning the net flow negative.
This raises the question: Have Ethereum ETFs failed to generate the expected interest?
Reasons Behind the Outflow Trend
Exploring why investors are moving away from Ethereum ETFs entails looking at various factors.
Unlike staking Ethereum (ETH) to earn a 1-5% annual percentage yield, holding an Ethereum spot ETF deprives investors of this potential passive income.
Furthermore, the Ethereum-to-Bitcoin ratio has dropped by 50% over the past two years, prompting former Ethereum users to shift to Layer 2 solutions or more cost-effective Layer 1 blockchains.
For example, the ratio of SOL to ETH has surged by 346%.
Ethereum has also become inflationary, issuing more Ethereum than it burns, a contrast to Bitcoin’s capped supply of 21 million BTC.
Recent upgrades like the Proto-Danksharding update have lowered transaction fees on Layer 2, reducing Ethereum’s revenue stream.
The substantial outflows from Grayscale’s ETHE contribute to concerns and the negative net flow of the ETF.
The projected price surge of ETH to $4,000 post Ethereum ETF launch appears increasingly improbable.
According to the latest figures from CoinMarketCap, ETH, with a modest 0.66% rise, currently trades at $2,321—falling notably short of expectations.
Bitcoin ETF Performance Comparison
In contrast, the Bitcoin ETF has seen a net inflow of $16.897 billion since its inception.
Despite outflows from Grayscale’s GBTC, other BTC ETFs, including BlackRock’s and others, have posted favorable net inflows collectively.
While intermittent outflows have occurred, only recently have Bitcoin ETFs faced a sustained period of continuous outflow in the past two weeks.
It remains to be seen whether Ethereum ETFs will shift from outflows to inflows or if investors will continue experiencing a prolonged outflow pattern.