The recent surge in outflows from Grayscale’s newly minted Ethereum exchange-traded fund (ETF) is anticipated to subside within the week, potentially triggering a price uptick for Ether (ETH), according to market analysts.
Since its conversion from a trust to an ETF on July 24, Grayscale Ethereum Trust (ETHE) has experienced a staggering $1.7 billion in outflows. This represents nearly 18% of its initial assets under management (AUM). Despite this, other Ethereum ETFs, such as BlackRock’s iShares Ethereum Trust (ETHA) and Bitwise Ethereum ETF (ETHW), have seen substantial inflows, totaling hundreds of millions of dollars.
Steno Research senior analyst Mads Eberhardt believes that the worst of the ETHE outflows is likely behind us. Drawing parallels with the Grayscale Bitcoin Trust (GBTC), he suggests that the peak outflow for ETHE will occur this week, followed by a potential rally in ETH prices. This optimistic outlook is echoed by pseudonymous trader Evanss6, who compared the current ETH ETF market to the earlier Bitcoin ETF launch.
While the short-term outlook appears bullish, the long-term trajectory of Ethereum ETFs is equally promising. Samara Cohen, BlackRock’s investment chief for ETF and index investments, highlighted the robust demand for ETH exposure from institutional investors. She anticipates that crypto-based ETFs will become a staple in model portfolios by the end of 2024.
Also Read: Ethereum Open Interest Surges 150% To $1.5B Amidst ETF Frenzy, Warning Signs Flash
The confluence of these factors suggests a bright future for Ethereum ETFs. As the initial outflow frenzy subsides and institutional adoption grows, the market could witness a sustained upward trend in ETH prices. However, investors are advised to exercise caution and conduct thorough research before making investment decisions.
The surge in outflows from Grayscale’s Ethereum ETF has also sparked concerns about potential market volatility. While the short-term outlook appears bullish due to the anticipated end of outflows, the rapid pace at which investors are redeeming their shares underscores the market’s uncertainty. Some analysts warn that if the outflow trend continues beyond expectations, it could exert downward pressure on ETH prices. However, the overall sentiment remains optimistic as institutional interest in Ethereum continues to grow, and the broader cryptocurrency market shows signs of recovery.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
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