Ethereum Records Worst Weekly Outflows since August 2022, ETF Excitement Fades?

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As a researcher with a background in cryptocurrencies and digital assets, I find the recent developments in the Ethereum market intriguing. The report from CoinShares detailing the third consecutive week of outflows for digital asset investment products is concerning, especially considering the prediction of an Ethereum spot ETF approval this week.

CoinShares, a well-known digital asset management platform, released a report revealing that investment products based on digital assets experienced their third successive week of outflows, amounting to $30 million. A notable difference from the previous weeks was that most cryptocurrency investment vehicles recorded inflows, which were more than compensated by Grayscale’s massive outflows worth $153 million. Surprisingly, Ethereum-linked products experienced the largest withdrawals in almost two years, totaling $61 million over the past week alone. Over the previous fortnight, these Ethereum outflows have exceeded $119 million, making Ethereum the poorest performer in terms of net flows for the year thus far.

As an analyst, I had anticipated the SEC’s approval of the Ethereum ETF by July 4 based on various predictions. However, my expectations were dashed when the SEC requested that the issuers refile the form S-1 on July 8 instead. Consequently, the approval process is now likely to be delayed until mid-July or even late July.

As an analyst, I’d put it this way: The delay in the Ethereum ETF approval process leaves me and other Ethereum holders in a state of uncertainty. Previously, ETFstore President Nate Geraci indicated that recent S-1 revisions were relatively minor, potentially signaling regulatory approval for trading within the next two weeks. However, an exact timeline is still elusive, with the SEC suggesting a potential launch this summer.

The CoinShares fund flow report revealed that the introduction of the Ethereum spot ETF resulted in investors selling off their holdings, making it a “Sell the News” occurrence.

Trading Volumes See an Uptick but Remain Below the Yearly Average

Last week, trading volumes surged by 43% compared to the previous week, reaching a total of $6.2 billion. However, this figure is still significantly lower than the average weekly volume of $14.2 billion recorded throughout the year up to now.

As an analyst, I’ve examined the regional flow of funds, and I can tell you that the United States saw a total inflow of approximately $43 million. In contrast, Brazil and Australia recorded smaller inflows with $7.6 million and $3 million respectively. However, it is essential to note some significant outflows in specific regions. For instance, Hong Kong, Germany, Canada, and Switzerland experienced notable negative sentiment, resulting in outflows ranging from $10 million to $30 million.

Last week, investment products focusing on multiple assets and Bitcoin led the way with $18 million and $10 million in new investments, respectively. Short-Bitcoin positions saw outflows amounting to $4.2 million, indicating a possible change in investor sentiment towards the cryptocurrency. Additionally, there were inflows of $1.6 million for Solana and $1.4 million for Litecoin among various other altcoins.

In the year 2024, there’s been a generally optimistic view towards digital assets. However, investments in blockchain equities have seen substantial withdrawals totaling over $500 million, which amounts to approximately 20% of their assets under management.

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2024-07-01 16:13