Ethereum ETFs Continue to Underperform
Ethereum exchange-traded funds (ETFs) are experiencing significant challenges, with the largest outflows recorded since July 2024. On September 23, a total of $79.2 million exited the Ethereum ETF market, raising concerns about institutional interest in the digital asset.
The Ethereum ETFs launched with high expectations in July 2024, yet they have struggled to maintain the anticipated momentum. A deeper analysis reveals that Grayscale’s Ethereum Trust (ETHE) suffered the most, with $80.6 million flowing out, resulting in a cumulative net outflow of $2.85 billion. Conversely, Bitwise’s ETF, known as ETHW, saw an influx of $1.3 million, increasing its cumulative net inflows to $320.3 million.
This recent outflow represents the fourth-largest since the inception of these ETFs in mid-2024. Currently, the total net assets (TNA) of Ethereum ETFs stand at $7.2 billion, starkly contrasting with Bitcoin ETFs, which boast a TNA of $57.9 billion.
Ethereum's Comparative Performance
The underperformance of Ethereum ETFs relative to Bitcoin ETFs raises questions about Ethereum's future price trajectory. Specifically, the ETH/BTC trading pair is at levels last seen in April 2021, negating almost three years of relative gains against BTC.
Ethereum’s recent poor performance against Bitcoin is understandable given Bitcoin's achievement of a new all-time high (ATH) of $73,737 in March 2024, whereas Ethereum has not surpassed its ATH of $4,878 from November 2021.
Future Challenges and Opportunities
Ethereum ETFs are facing potential headwinds with the increasing possibility of ETFs for other cryptocurrencies like Ripple’s XRP. Grayscale has launched the first XRP trust in the U.S., indicating a potential future XRP ETF, which could further shift investor focus away from Ethereum.
Analysts Remain Optimistic
Despite these challenges, many analysts remain optimistic about Ethereum. Research from ASXN suggested that Ethereum ETFs could attract monthly inflows between $800 million and $1.2 billion. Matt Hougan of Bitwise likened Ethereum to the "Microsoft of blockchains," expressing confidence in Ethereum's long-term potential.
At the time of writing, Ethereum is trading at $2,610, experiencing a slight decrease of 1.7% over the past 24 hours. Analysts speculate a potential upward trend reversal in the final quarter of 2024.
