Crypto News – Spot ETF Delays Lead to Ethereum’s Largest Outflows in Two Years
Crypto News- The US Securities and Exchange Commission’s (SEC) prolonged delay in approving spot Ethereum exchange-traded funds (ETFs) has led to the most significant outflows for Ethereum ETFs in the past two years. According to CoinShares’ latest digital asset fund report, these outflows contributed to a third consecutive week of negative flows, totaling $30 million for global crypto-related investment products.
James Butterfill, head of research at CoinShares, noted that despite last week’s modest outflows, which suggested “a significant stemming of the outflows,” the negative sentiment surrounding Ethereum ETFs remains strong.
Interestingly, this sentiment didn’t significantly impact trading volumes, which surged by 43% week-on-week to $6.2 billion, although this is still below the weekly average of $14.2 billion.
Ethereum Outflows Hit Record Highs
Ethereum recorded $61 million in outflows last week, marking the highest outflows since August 2022. Over the past two weeks, Ethereum outflows have totaled $119 million, making it the worst-performing asset on a year-to-date basis with a negative net flow of $25 million. Butterfill attributed this to investors’ concerns over the uncertainty of when Ethereum ETF products will begin trading. Bloomberg ETF analyst Eric Balchunas noted that the approval might be further delayed until the week of July 8, as the SEC and applicants are still finalizing documents.
Bitcoin Gains Amid Ethereum’s Struggles
While Ethereum faced significant outflows, Bitcoin benefited from the shift in sentiment, recording $10 million in inflows last week. The CoinShares report highlighted that most Bitcoin ETF providers, including BlackRock’s IBIT and Fidelity’s FBTC, saw modest inflows, partially offsetting the $153 million outflow from Grayscale’s GBTC fund.
The positive sentiment also led to $4.2 million in outflows from Short-Bitcoin positions, as market observers noted increased interest from bearish traders due to Bitcoin’s price struggles.
Other Digital Assets and Blockchain Equities
Large-cap alternative digital assets like Solana and Litecoin also saw minor inflows of $1.6 million and $1.4 million, respectively. Despite the overall positive sentiment for crypto this year, blockchain equities have suffered outflows of $545 million, representing 19% of assets under management (AuM), according to Butterfill.
Overall, while Ethereum faces significant challenges due to the SEC’s delays, other digital assets and Bitcoin have seen varying impacts, highlighting the diverse reactions within the crypto market.
FAQ
Why did Ethereum experience significant outflows recently?
Ethereum saw significant outflows due to delays in the approval of spot Ethereum exchange-traded funds (ETFs) by the US Securities and Exchange Commission (SEC). Investors became uncertain about the timeline for these ETFs, leading to a negative sentiment and withdrawals from Ethereum-related investment products.
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