Net Inflows for ETH ETFs Turn Positive Despite Grayscale’s $2 Billion Outflows

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The dynamics of the U.S. spot Ether exchange-traded funds (ETFs) have seen a notable shift, with daily net inflows turning positive once again.

This turnaround is particularly striking given the substantial cumulative outflows from the Grayscale Ethereum Trust (ETHE), which have now exceeded $2 billion.

Ethereum ETF Inflows Surge

On Thursday, the collective Ether ETFs recorded a net inflow of $26.7 million. A significant portion of this influx was driven by BlackRock’s iShares Ethereum Trust (ETHA), which attracted $89.6 million. This data, provided by Faride Investors, reflects investors’ renewed interest in these financial products.

On the other hand, Grayscale’s Ethereum Trust recorded outflows of $78 million on the same day. This brings ETHE’s total outflows since its conversion to a spot ETF to over $2 billion.

ETHE was initially a trust that made Ether accessible to institutional investors. Before transitioning to a spot ETH ETF, ETHE held $9 billion in Ether. As of August 1, outflows have reduced the fund’s holdings by over 22%, reflecting a significant shift in investor sentiment. 

Despite this, market analysts are beginning to see a potential stabilization on the horizon. Mads Eberhardt, a senior analyst at Steno Research, has suggested that the massive outflows from ETHE will likely diminish by the end of the week.

He believes a slowdown in these outflows could act as a bullish signal for Ether prices, indicating potential upward movement.

Will Cai, head of indexes at Kaiko, echoed a similar perspective on July 23, highlighting Ether’s price sensitivity to inflows into spot products. This sensitivity is evident as Ether’s current trading price stands at $3,168, representing an 8.5% decline since the launch of the ETFs.

Possible Price Trajectory for Ethereum

Ethereum’s price has been trending downward, characterized by lower highs and lows, indicating increasing bearish pressure and unstable market dynamics.

Recently, Ethereum has consistently rebounded from below $3000, signaling strong demand. However, the present trading setup points to a potential revisit to these lower levels, as the latest candlestick closes below the crucial 200-day moving average.

This suggests the possibility of another price reversal, potentially pushing the token into a bidding range.

Ethereum is currently clinging to a vital support area, and losing this support could trigger a significant bearish correction. Since the launch of the spot ETFs, Ethereum’s price has dropped by over 10%, with a $250 million reduction in open interest within the past few hours.

So, before its rally can resume, Ether must reclaim levels above the 200-day moving average. Failure to breach this critical level could signal further downside risk.