ETH ETFs Outflows: Institutional Investors Pull $79M from Ether ETFs, Marking Fourth-Highest Outflow
With over $79 million leaving Ether ETFs on Monday, they saw their biggest withdrawals since July, indicating a decline in institutional interest in the second-largest cryptocurrency in the world. According to data from SoSoValue, the numbers are the highest since July 29, when ETHs registered a cumulative $98 million, and the fourth-highest when they initially went live on July 23. Bitwise’s ETHW saw a little over $1.3 million in inflows on Monday, but Grayscale’s ETHE product accounted for nearly all of the withdrawals. No activity was seen in the inflow or outflow of other products.
Even if the Federal Reserve’s recent rate cuts have sparked a rise in the cryptocurrency market overall, driving up ether prices by 11% in the last week, the outflow occurred. The discrepancy between ETF outflows and ETH’s price momentum. However, this points to investors’ continued skepticism over the asset’s potential for long-term growth. The market as a whole appears to be favoring Bitcoin’s perceived stability over Ether’s riskier, high-yield potential, as evidenced by the fact that a highly followed ratio measuring the relative price strength of ether against Bitcoin has slid to its lowest level since April 2021.
Ethereum’s World Computer Narrative Struggles to Attract TradFi Investors, Says Presto Labs
In contrast to Bitcoin’s widely accepted digital gold tale, Ethereum’s world computer narrative does not sit as comfortably with conventional finance (TradFi) investors, according to Peter Chung, Head of Research at Presto Labs.
TradFi investors may not respond as enthusiastically to ETH’s investment thesis than to BTC’s. Gold’s investment thesis as an inflation hedge is well-known, and therefore, it is not a leap for TradFi investors to wrap their heads around the idea of ‘digital gold. On the other hand, ETH’s ‘world computer’ narrative is much more difficult for non-technicals to grasp.
Even if they manage to come around, their conviction level would need to be high enough to justify adding a second digital asset exposure after a BTC ETF. This could be challenging because, for those who have already allocated to a BTC ETF in their portfolio, adding another digital asset exposure provides substantially less incremental diversification benefit than the first exposure,
Chung
While Ether has dropped 52% from its 2021 peak and has yet to break its 2021 highs, Bitcoin reached new all-time highs in April in US dollars before plunging 20%. While Ether holders have gained just under 15% year to date, Bitcoin investors have received a return of almost 50%.
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