Ethereum ETF Outflows Continue for 12 Days While Bitcoin Funds Show Recovery

Over the last 12 trading days, spot Ethereum exchange-traded funds have lost $370 million in assets, marking their longest streak of losses to date as the price of Ethereum struggles.

Within this group of funds, which began trading last year, the iShares Ethereum Trust (ETHE) and Grayscale Ethereum Trust (ETHE) have seen the largest outflows, totaling $146 million and $106 million respectively, as reported by crypto data provider CoinGlass.

These outflows correlate with a decline in Ethereum’s price, dropping from $2,200 on March 5 to its current valuation of approximately $1,950, according to data from CoinGecko. The asset has faced challenges recently, driven by investor skepticism regarding its speed and efficiency compared to other blockchain competitors, alongside a broader downturn in crypto and risk-sensitive assets influenced by macroeconomic concerns.

In contrast, spot Bitcoin ETFs have gained $660 million this week, regaining some of the ground lost during their own downturn.

During an interview on Thursday at the Digital Asset Summit in New York, Robert Mitchnick, head of digital assets at BlackRock, noted that the underwhelming start of Ethereum ETFs is partially due to the absence of staking options.

This week, NYSE Arca submitted a request for staking on behalf of Bitwise, while Grayscale, 21Shares, and Fidelity have also sought changes to their respective funds to allow staking.

The SEC has received the filings from NYSE and Grayscale. Earlier this month, the Commission met with Coinbase to discuss how potential liquidity risks for spot Ethereum ETFs might be addressed based on the amount of ETH not allocated for staking.

“A staking yield plays a significant role in generating investment returns in this sector,” Mitchnick remarked.

Staking rewards are given to Ethereum investors who lock their assets and engage in validating transactions.

Currently, the amount of Ethereum being staked has risen to 33.8 million ETH, based on data from the testnet block explorer beaconcha.in. This marks a 0.5% increase from the 33.6 million ETH staked on March 5, which coincided with the recent losses of spot Ethereum ETFs.

Since their launch last July, spot Ethereum funds have accumulated $2.45 billion in net inflows, with BlackRock’s spot Ethereum ETF alone attracting $587 million. Analysts consider their launch a success, although this pales in comparison to spot Bitcoin ETFs, which have experienced over $35 billion in net inflows, according to research from U.K. asset manager Farside Investors.

“This underscores a growing institutional appetite for BTC, whereas ETH’s recovery appears sluggish as investors await more vibrant catalysts,” stated the crypto research firm BRN on X (formerly Twitter) on Friday.

Edited by James Rubin