Ethereum-based Exchange-Traded Funds (ETFs), which debuted in the US last week, have taken the cryptocurrency market by storm, with significant inflows into these products.
According to a recent report According to CoinShares, the emergence of these spot ETFs attracted $2.2 billion, marking a watershed moment for Ethereum and its investors.
Ethereum ETFs Surging. What About Bitcoin?
Coinshares revealed that with the launch of Ethereum ETFs, it saw not only a massive boost in capital, but also a 542 percent boost in the value of Ethereum exchange-traded products (ETPs).
While the boost in demand reflects growing interest from investors seeking exposure to Ethereum through regulated financial products, James Butterfill, head of research at Coinshares, emphasized that the figure remains “somewhat controversial.” Butterfill explained:
This number is somewhat controversial because Grayscale injected capital from its existing closed-end trust (~$1 billion) into its up-to-date Mini Trust ETF (a week earlier), which may aid explain the steady stream of outflows in recent years.
Regardless, the launch of these ETFs is an crucial milestone as it aligns with broader market trends where investors are increasingly looking for diverse and secure investment channels in the cryptocurrency space.
However, it’s not all positive news, as the entire digital asset market has seen mixed fortunes. For example, Grayscale’s Ethereum trust saw $285 million in net outflows, despite the overall market bullishness.
The broader cryptocurrency market has also felt the impact of these events. According to Coinshares, Bitcoin has continued to attract significant capital alongside Ethereum inflows, with $3.6 billion flowing in over the past month.
That brings inflows year-to-date to a historic high of $19 billion, fueled by speculation surrounding the U.S. election and potential changes in Federal Reserve policy. James Butterfill noted in particular:
In our view, the US election campaign comments surrounding Bitcoin as a potential strategic reserve asset and the increased chances of a Federal Reserve rate cut in September 2024 are likely reasons for the rebuilding of investor confidence.
What’s more, the CoinShares report delves deeper into the implications of these flows, highlighting a “record total inflow of $20.5 billion” across all digital assets in 2024. Trading volumes surged to their highest levels since May, further boosted by the launch of Ethereum spot ETFs in the US.
BTC and ETH Market Performance
As funds have surged into Bitcoin and Ethereum spot ETF products, their prices have struggled to keep up.
For example, Ethereum, despite launching its spot ETF product last week, exhibited “sell the news” price action, with the ETH price falling to $3,098 a few days after the news was released.
While the asset is now trading above $3,300, it has yet to match the optimism in spot ETF products. Bitcoin, on the other hand, despite falling to just $64,000 a few days after the launch of the ETH spot ETF, the asset quickly rebounded.
Bitcoin is currently trading at $68,850, which is a slight pullback from the previous price of $69,907 seen earlier today. Interestingly, one of the significant factors attributed to the current bullish price performance of Bitcoin is the recent positive statement by former President Donald Trump at the 2024 Bitcoin Conference.
Statements included firing Gary Gensler if elected president and the creation of a strategic national bitcoin reserve by the U.S. government.
Featured image created with DALL-E, chart from TradingView
