Over the past fortnight, Ethereum (ETH) has experienced a 10% drop due to bearish pressure. Compared to Bitcoin (BTC), ETH has performed disappointingly, resulting in its dominance plummeting to levels below 13%.
The primary reason for Ethereum’s lackluster performance is the weak demand from institutional investors. This is evident from the limited inflows into spot ETH exchange-traded funds (ETFs). Since their inception, Ethereum ETFs have witnessed only four weeks of positive netflows, as reported by SoSoValue. Consequently, the dwindling demand has caused a decrease in the fund market premium.
Recent data from CryptoQuant highlights that the Ethereum fund market premium was largely negative last week, indicating that ETH was trading at a discount on the ETF market.
Further data indicates a prevalence of selling pressure and low demand for ETH within the ETF market, signaling a bearish sentiment as significant investors adopt a cautious approach.
Despite Bitcoin ETFs showcasing robust numbers with inflows exceeding $2 billion in the previous week alone, Ethereum ETFs are struggling to perform. So, what factors are contributing to the underperformance of Ethereum ETFs?
Challenges Faced by Ethereum ETFs
Nate Geraci, the President of ETF Store, shared insights into factors influencing the weak inflows to ETH ETFs, apart from the prevailing bearish market sentiment.
Geraci mentioned that being the first ETFs to launch, Bitcoin gained an initial advantage known as the first-mover advantage, overshadowing Ethereum. Additionally, the outflows from the Grayscale Ethereum Trust (ETHE) ETF have impacted the prospects of ETH ETFs negatively, with ETHE witnessing outflows amounting to $20 billion since its inception.
Geraci also noted that insufficient education among advisors regarding ETH contributes to institutional disinterest in the asset.
“It’s just a matter of time before we see an uptick in spot ETH ETF inflows. It may take some time, though.”
Potential Impact of a Trump Victory on ETH ETFs
Geraci suggested that if former U.S. President Donald Trump secures victory in the upcoming November elections, it could have positive implications for Ethereum ETFs.
Prior to the U.S. Securities and Exchange Commission (SEC) authorizing Spot ETH ETFs, issuers were instructed to eliminate staking provisions. However, Geraci believes that staking might be permitted under Trump’s administration.
Ethereum traders seem to be anticipating a Trump win in the U.S. presidential race. As of the latest data, Ethereum funding rates surged by 85% to 0.0119, indicating a growing bullish sentiment in the Futures market, where there is high demand for long positions.