Ethereum Spot ETFs Debut in the US, Attracting $2.2B Inflows as BTC Market Share Dips

Ethereum spot exchange-traded funds (ETFs) that debuted in the US last week have taken the cryptocurrency market at large by storm with considerable inflows into these products.

Ethereum spot exchange-traded funds (ETFs) debuted in the US last week, and they have already taken the cryptocurrency market at large by storm.

According to a recent report by CoinShares, the advent of these spot ETFs has attracted a collective $2.2 billion, marking a pivotal moment for Ethereum and its investors.

Surge in Ethereum ETFs, What about Bitcoin?

With the launch of Ethereum ETFs, a massive capital surge has not only been seen but also a 542% increase in Ethereum exchange-traded products (ETPs), as revealed by Coinshares.

Although the demand surge reflects the growing interest from investors seeking exposure to Ethereum through regulated financial products, James Butterfill, head of research at Coinshares, highlighted that the figure remains “somewhat controversial.” Butterfill explained:

This figure is somewhat controversial as Grayscale seeded its new Mini Trust ETF (the week prior) with capital from its incumbent closed-end trust (~US$1bn), which may help explain the steady stream of outflows in recent years.

Regardless, introducing these ETFs represents a significant milestone, as it aligns with broader market trends where investors increasingly seek diverse and secure investment channels within the crypto space.

However, it’s not all positive news, as the overall digital asset market has experienced mixed fortunes. For instance, the Ethereum trust from Grayscale saw $285 million in net outflows despite the overall market buoyancy.

The broader crypto market has also felt the impact of these developments. According to Coinshares, Bitcoin has continued to attract significant capital alongside Ethereum’s inflows, with $3.6 billion flowing in over the past month.

This brings its year-to-date inflows to a historic high of $19 billion, underpinned by speculation around the US elections and potential changes in Federal Reserve policies. James Butterfill particularly noted:

We believe the US electioneering comments around Bitcoin as a potential strategic reserve asset, and the increased chances for a September 2024 FED rate cut are the likely reason for renewed investor confidence.

Furthermore, the CoinShares report delves into the aftermath of these flows, highlighting a “record-breaking total inflow of $20.5 billion” across all digital assets for 2024. Trading volumes have surged to their highest levels since May, boosted further by the Ethereum spot ETFs’ launch in the US.

BTC And ETH Market Performance

Following the recorded inflows into Bitcoin and Ethereum spot ETF products, their price performance has struggled to keep up the pace.

Ethereum, for instance, despite launching its spot ETF product last week, the asset demonstrated a “sell the news” price action, with ETH dropping as low as $3,098 days following the news.

Although the asset is now trading above $3,300, it has yet to match the optimism in its spot ETF products. Bitcoin, on the other hand, despite also seeing a decline to as low as $64,000 days following the ETH spot ETF launch, the asset was quick to recover.

Currently, Bitcoin trades at $68,850, a slight retracement from its earlier price of $69,907 seen earlier today. Notably, one notable factor attributed to Bitcoin’s current bullish price performance is the recent positive statement by former president Donald Trump at the 2024 Bitcoin Conference.

These statements include firing Gary Gensler if elected president and creating a US Government strategic national Bitcoin reserve.

Featured image created with DALL-E, Chart from TradingView

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