Blackrock’s Ethereum ETF saw an inflow of $118 million on Tuesday, per SoSoValue data, more than the inflows seen in its Bitcoin ETF.
In contrast, BlackRock’s Bitcoin ETF saw an inflow of just $75 million on Tuesday.
The strong inflows into BlackRock’s Ethereum ETF ensured that Tuesday was a net positive day of inflows in the Ethereum ETF market.
$33.66 million flowed into the newly launched group of spot Ethereum ETF products.
Ethereum spot ETF had a net inflow of $33.6683 million yesterday, the first net inflow after net outflows in the past 4 days. Grayscale ETF ETHE had a single-day outflow of $120 million, and the current historical net outflow of ETHE is $1.844 billion. BlackRock ETF ETHA had a… pic.twitter.com/T9beW4MRsT
— Wu Blockchain (@WuBlockchain) July 31, 2024
The Ethereum price was last trading in the mid-$3,300s, stuck within multi-week $3,100-3,500ish ranges.
The Ethereum market is showing a lack of conviction right now as ETH seems to be stuck near all of its major short and medium-term moving averages.
So, why weren’t strong BlackRock Ethereum ETFs a catalyst for an upside?
Grayscale Ethereum ETF Outflows Continue Hurting Market
A day of net positive inflows into spot Ethereum ETF products has been rare since their launch earlier this month.
That’s because Grayscale’s Ethereum ETF product has seen a whopping $1.84 billion in outflows since its conversion.
Despite over $600 million of inflows into BlackRock’s Ethereum ETF and over $250 million into Fidelity and Bitwise’s products, net Ethereum ETF inflows since launch are negative $400 million, SoSoValue data shows.
As a result, Ethereum ETFs aren’t a tailwind to the market right now. They will need to turn decisively positive to start pushing the price higher.
Outflows from Grayscale’s Ethereum ETF are due to two factors.
Firstly, traders bought Grayscale’s Ethereum ETF when it was a non-convertible trust at a discount to net asset value.
They can now convert their shares on a one-to-one basis for ETH and are closing their position on this trade, triggering outflows.
Secondly, Grayscale charges a huge 2.5% fee, more than 10x most of its competitors.
Analysts think that assuming the trend continues, Grayscale’s Ethereum ETF could drain within weeks.
Ethereum ETFs saw $33.7M of net inflows yesterday.
Grayscale's $ETHE ETF had over $120M in outflows.
20% of $ETHE's holdings have been dumped in the first 6 days of trading.
At this rate, they should run out of $ETH in a couple of weeks. pic.twitter.com/g0zazdiQdK
— Wealth Mastery by Lark Davis (@WealthMastery_) July 31, 2024
Could that set the stage for an Ethereum price rebound?
Can BlackRock’s Ethereum ETF Power an ETH Price Rebound?
Steno Research analyst Mads Eberhardt noted on X that BlackRock and Fidelity’s Ethereum ETFs saw inflows of around one-third of their Bitcoin ETFs at the same stage earlier this year.
He noted that this occurred despite Ethereum ETFs gaining less attention, sub-optimal market conditions, and the fact that Ethereum has worse liquidity than Bitcoin.
BlackRock's and Fidelity's Ethereum ETFs have seen about one-third of their respective Bitcoin ETF inflows.
This has occurred despite overall less attention to the Ethereum ETFs, a less-than-optimal month to launch, full awareness by the market that Grayscale's Ethereum ETF must… pic.twitter.com/b23WdqEVCh
— Mads Eberhardt (@MadsEberhardt) July 31, 2024
Assuming that BlackRock, Fidelity, and Bitwise can keep up their streak of steady inflows, Ethereum ETFs will likely return to consistent net inflows once the Grayscale ETF is drained.
That could help facilitate an ETH price rebound in the coming months.
Other factors, such as Fed rate cuts, a potential pro-crypto Trump presidency, and continued crypto adoption, are also likely to facilitate upside in the coming months.
With Ethereum currently around 20% below yearly highs above $4,000 and well below record highs, Ethereum might be one of the best cryptos to buy right now.
Ethereum Alternative to Consider
Investors who jump into Ethereum right now could bag gains of as much as 3x in this bull market.
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