Research Reveals that Ethereum ETF Sell-Off Signals a Weaker Market Structure

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The much-anticipated Spot Ether ETF launch euphoria seems to be fading following massive outflows from the funds. These Ether ETF outflows triggered a bearish sentiment, leading to a price decline for Ethereum in the last 24 hours. 

Ethereum (ETH) trades at $3,184, down 8% in the past day. Amid growing concerns, Analytical firm 10x Research revealed that the outflows for Spot Ether ETFs follow a similar pattern to Spot Bitcoin ETFs.

Moreover, the launch of Ethereum ETFs coincides with the first round of Mt. Gox crypto distributions, which might have depressed market sentiment.

10x Research Highlight Ethereum’s Price Dip

According to 10x Research, Grayscale’s $9 billion Ethereum Trust recorded massive outflows of nearly $1 billion in two days.

Meanwhile, Bitwise’s Ethereum spot ETF recorded approximately $204 million in inflows on the first trading day. These contrasting trading positions hint at a mixed market sentiment among investors. 

10x Research gives a bearish outlook on Ethereum’s price based on current market conditions. 10x Research notes that Bitcoin enjoys investors’ confidence as it is digital gold. However, Wall Street traders are likely cautious with their Ethereum investments.

#Ethereum Crashing -> what’s going on? https://t.co/ciaqYVYuZh pic.twitter.com/czrg8YRwW6

— 10x Research (@10x_Research) July 25, 2024

Data from Farside Investors reveals that Spot Ether ETFs recorded net outflows of $113.3 million on their second trading day. Grayscale’s Ethereum Trust accounted for most outflows in the past two days, losing $326.9 million yesterday.

Ethereum ETF Flow (US$ million) – 2024-07-24

TOTAL NET FLOW: -133.3
(Provisional data)

ETHA: 17.4
FETH: 74.5
ETHW: 29.6
CETH: 0
ETHV: 19.8
QETH: 2.5
EZET: 3.9
ETHE: -326.9
ETH: 45.9

For all the data & disclaimers visit:https://t.co/HfqQHgwr3Z

— Farside Investors (@FarsideUK) July 25, 2024

Fidelity’s Ethereum Fund (FETH) and Bitwise Ethereum ETF (BITW) led the inflow charts with $74.5 million and $29.6 million, respectively. 

According to crypto analyst Daan Crypto Trades, the ETFs have suffered significant outflows. Daan expects the Ether ETF situation to improve once ETHE outflows drop to $100 million or below by next week.

Yesterday’s $ETH ETF Flows came in at -$133.3M.

So far the ETFs have been a net outflow. I'd expect this to turn around once $ETHE comes down to some lower ~$100M daily outflows somewhere next week or so.

I think a lot of people are watching what happened with $GBTC and are… https://t.co/AQ5rClmVr9 pic.twitter.com/FtUFiRelXQ

— Daan Crypto Trades (@DaanCrypto) July 25, 2024

Also, the analyst noted that some investors recall the GBTC outflows and are trying to offload Grayscale’s ETHE. So far, the ETFs have lost 10% in outflows. However, Daan Crypto Trades believes that ETHE will not remain an issue as more inflows could soon balance the impact. 

More Reactions to Spot Ether Outflows

Also, Daan believes that if the outflows from Ether ETFs follow a similar pattern to GBTC, it might recover soon.

If we're repeating the #Bitcoin ETF launch & Grayscale $GBTC outflow scenario somewhat, which it looks like it might. I'd expect it to go in accelerated fashion.

Quicker flows frontrunning the $ETHE outflows, sharper correction, sharper recovery.

For now it will just be a… https://t.co/kmrjSnHvMf

— Daan Crypto Trades (@DaanCrypto) July 25, 2024

However, he believes that Spot Ether ETF performance remains speculative until the market finds balance. Additionally, he noted that the excitement before the Spot Bitcoin ETF launch was much higher, and the market was different.

Daan studied Ethereum’s behavior on the price chart, noting that it dropped to the lower range and testing the 200-day MA/EMA. He advised investors to wait for a drop to $2,800 or a rally to $3,700 to determine Ethereum’s next price moves.

$ETH Fell back down to the lower range and is now testing the Daily 200MA/EMA.

Besides those moving averages, it's right in the middle of everything here and it might be wise to wait for either extreme at $2.8K or $3.7K if you're looking for solid high timeframe levels. pic.twitter.com/IItz6X9EAX

— Daan Crypto Trades (@DaanCrypto) July 25, 2024

Meanwhile, analyst Michaël van de Poppe noted that investors’ shift to Ethereum will increase in the coming days. Van de Poppe believes that gaining $1 billion in trading volume on the first day is massive for an ETF.

Also, the analyst stated there will likely be a minor price correction during the offload of the Grayscale ETHE Trust. He noted that Bitcoin faced a similar situation in the first month of trading the US spot BTC ETFs. 

So, Ethereum will likely witness a price recovery if investors remain resolute and retain the Spot Ether ETFs.