The price of ether (ETH) has plummeted more than 20% in the past month despite the launch of spot Ethereum exchange-traded funds (ETFs) in the United States. Since their inception, the funds have witnessed substantial outflows, further weakening ether’s price.
According to the latest edition of the Bitfinex Alpha report, Ethereum ETFs have failed to show resilience after initial outflows like the U.S. spot Bitcoin ETFs did following their launch earlier this year.
Ether Price Still Weak
The weakness in ether’s price can be seen in the ETH/BTC pair, which has been on a downward trajectory since the Ethereum Merge in September 2022. At the time, ETH experienced relative strength against bitcoin (BTC). Market participants expected the launch of the Ethereum ETFs to bolster ETH’s position, but the opposite has been the case; the weakness seen in the ETH/BTC pair has not just persisted but intensified.
Earlier this month, the pair plunged to its lowest level in roughly three years, touching 0.0367 ETH/BTC. It now faces resistance at the 0.0461 level, a peak recorded in February 2021 during the cycle high before the ETH/BTC bull market commenced. This weakness can also be attributed to spot Bitcoin ETFs directing passive flows and increased demand toward BTC, a trend that has remained novel to ETH since July 23.
“This ongoing trend raises questions about the lack of effectiveness of Ethereum ETFs in balancing the market dynamics between these two major crypto assets. The continued underperformance of ETH against BTC suggests deeper market forces at play, beyond the mere availability of institutional investment products,” Bitfinex analysts said.
ETF Outflows Surge
The analysts outlined several factors that have contributed to the ETH plunge since the launch of the ETFs. They include large-scale ETH selling by crypto market makers Jump Trading, Wintermute, and Flow Traders, lukewarm sentiment around the Ethereum ETF launch, market volatility and liquidity concerns, and an unfavorable macroeconomic environment.
Furthermore, one notable factor affecting ether’s weakness is the rate at which the Grayscale Ethereum Trust (ETHE) sees outflows and pushes supply into the market. Compared to the Grayscale Bitcoin Trust (GBTC), which had assets under management hovering around 76.3% on its 20th trading day post-launch, ETHE assets under management stood at 70%.
Meanwhile, Bitfinex claims that launching Ethereum ETFs in the summer, a period of lower trading volumes and weaker investor engagement has also contributed to their underperformance and, in turn, the ETH price.
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