Despite the ETH price recovery after the Fed rate cut decision the outflows from spot Ethereum ETF have continued suggesting a fragile market sentiment.
The spot Ethereum ETH $1 788 24h volatility: 1.0% Market cap: $215.88 B Vol. 24h: $21.57 B exchange-traded funds (ETFs) have witnessed massive outflows since the month of July with more than $79 million in outflows registered on Monday, September 23. This shows that the institutional demand for the world’s second-largest asset class has been waning in recent weeks.
As per the data from Farside Investors, Grayscale Ethereum ETF (ETHE) led the most outflows at $80.6 million on Monday. On the other hand, Bitwise’s ETHW recorded inflows of $1.3 million. Besides, all other spots Ether ETFs have seen zero inflows.
This is true not only for Monday but for the past eight trading sessions where most of the Ether ETFs saw zero inflows. On the other hand, the Bitcoin ETF inflows have resumed once again following the Fed rate cut decision earlier this month. This shows that institutional players clearly prefer Bitcoin to Ethereum.
Peter Chung, head of research at Presto Labs, noted that Ethereum’s “world computer” concept doesn’t connect as effectively with traditional finance (TradFi) investors as Bitcoin’s “digital gold” narrative. Speaking to CoinDesk, Chung said:
“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.”
On-chain Metrics for Ethereum
The Ethereum price has witnessed a strong recovery gaining more than 15% over the past week and is currently trading around $2,650 levels with a market cap of $318 billion. However, the ETH on-chain metrics aren’t showing much strength. Analysts said that the ETH price has gained on the back of a dovish Fed stand, however, heavy outflows from spot Ethereum ETFs indicate fragile market sentiment. Augustine Fan, head of insights at SOFA.org said:
“Will a continued price rally rescue ETH ETF inflows from their current doldrums? The answer likely depends on whether we see another blow-off top in equity markets before November. Ethereum has gained 11% over the past week on no new developments. However, the latest heavy outflow from Ether ETFs indicates uncertain sentiment among investors on its future growth momentum.”
On the other hand, a key ratio measuring the relative price strength of ether compared to Bitcoin BTC $93 195 24h volatility: 0.0% Market cap: $1.85 T Vol. 24h: $38.26 B has fallen to its lowest point since April 2021, indicating that the broader market is favoring Bitcoin’s perceived stability over ether’s higher-risk, high-yield potential.
Besides, the continued selling by the Ethereum Foundation and Vitalik Buterin has also dampened the sentiment for ETH.
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