Spot Ethereum ETFs See Outflows

Investing.com — Spot Ethereum ETFs are experiencing net outflows in their second week of trading, similar to the initial performance of Bitcoin ETFs, according to Citigroup strategists.

However, unlike Bitcoin, the recent price movements of Ethereum have been more affected by equity market trends rather than ETF flows. Citi analysts noted that the recent correction in risky assets indicates that cryptocurrencies provide limited diversification benefits at present. They added, “Crypto fundamentals are holding up overall, as stablecoins have avoided sharp outflows and hash rate has risen despite weaker price action.”

Citi also argued that Bitcoin has not fulfilled its role as “digital gold,” stating, “Despite both gold and Bitcoin being limited supply, zero-coupon instruments, the original cryptocurrency does not exhibit gold’s ‘store of value’ properties.” They concluded that during the recent market correction, Bitcoin failed to act as a safe haven, reaffirming its status as a risk asset.

Through August 5, spot Bitcoin ETF net inflows totaled $19.1 billion, accounting for over 40% of the variance in weekly Bitcoin price movements since their launch in January. In contrast, ETH ETFs faced $460 million in net outflows during their first two weeks of trading.

Citi pointed out, “The variance in price action between Bitcoin and Ethereum highlights differing investor behaviors and market reactions to these two leading cryptocurrencies. The initial ETH ETF flows have been negative, but the Bitcoin ETF launch also had a post-launch decline between days 4 and 12.”

Despite the broader crypto market selloff, certain fundamentals have fared well. Search interest in cryptocurrencies has increased, and stablecoins have not experienced significant outflows. While Ethereum’s network activity slowed, Bitcoin’s remained relatively stable, albeit at low levels.

Citi noted, “Hash rate remains volatile though has moved higher as of late.” Furthermore, volumes on decentralized exchanges continue to rise compared to centralized exchanges.