Key facts:
The ETH cryptocurrency remains above $2,600 for now.
ETH ETFs have not performed as well as many had hoped.
Ethereum’s cryptocurrency Ether (ETH) ETFs saw a net outflow of nearly $80 million on Monday, marking their largest withdrawal of capital since late July.
This event highlights the challenges faced by financial instruments based on the second most valuable digital asset on the market in an increasingly competitive environment.
The Grayscale Ethereum Trust (ETHE) Fund was the protagonist of these movements, reporting an outflow of 80 million dollars in a single day, according to SosoValue data.
This figure represents the largest capital flight in Ethereum ETFs since July 31st.
While ETHE was experiencing this massive outflow, the Bitwise Ethereum ETF (ETHW) fund reported slight net inflows of $1.34 millionand the other seven spot ether ETFs remained with no inflows, either in or out.
The situation with ETHE is not new. Since its listing, has seen a total of $2.848 billion in outflowswhile its days of capital inflows have been zero since its launch in July, as seen in the following chart.
This shows that Ethereum ETFs have not met the expectations of many investorsDespite several days without significant movements in their flows, the overall figures continue to show a negative trend.
Total trading volume for all nine ether ETFs reached $167.35 million on Monday, up from $139.47 million the previous Friday, suggesting an increase in activity despite the trend of capital outflow.
Ether price holds up
Despite the difficulties in ETFs, the price of ether has shown strength in the past week.
The asset has increased its price by 9%, going from 2,200 to over 2,600 dollars in the current market, as seen in the following chart TradingView.
As reported by CriptoNoticias, the cryptocurrency started the week registering an increase in relation to bitcoin (BTC), after ending the last week also with an appreciation.
This comes after the US cut interest rates. When this happens it means that it is cheaper to borrow. If borrowing costs fall, investors have more incentive to borrow money and place it in higher risk assets, such as bitcoin, cryptocurrencies in general and stock market shares.
Ethereum ETFs hit a snag
Despite the recent rally in the price of ether, ETFs based on this cryptocurrency still face significant challenges.
One of the main factors behind its low trading volume compared to bitcoin (BTC) ETFs is the lack of leverage options.
Digital asset manager Galaxy Digital has noted that many trading desks still do not offer margin for Ethereum ETFs. Leverage allows investors to trade with more capital than they actually own, which could increase trading volume and, in turn, interest in ether ETFs.
This limitation significantly reduces the attractiveness of Ethereum ETFs compared to its Bitcoin-based competitors, resulting in an increasingly marked difference in trading volumes and capitalization between the two cryptocurrencies on centralized exchanges (CEX).
As the cryptocurrency market continues to evolve, Ethereum ETFs are at a crossroads, where capital movements and global financial policies will play a key role in their future.
