After trading hours on Wednesday, Ethereum Exchange traded funds (ETFs) in the United States beat expectations despite dramatic market weakness earlier this week by producing a notable $98 million in inflows. For these ETFs, this was the second day in a series of net inflows, highlighting their high use case amid market volatility.
With approximately $109.9 million, ETHA from BlackRock outpaced inflows, bringing its total holdings close to $900 million. Other notable inflows included Grayscale’s Mini trust at $4.7 million and Fidelity’s FETH at $22.5 million. In comparison, Grayscale’s ETHE saw an outflow of $39.7 million in the same frame, according to figures from Farside Investors UK.
Source: Farside Investors
Crypto market recovers after sharp sell-off
On August 5, the cryptocurrency market dropped significantly; Bitcoin fell below $50,000 while Ethereum the fastest one-day drop in three years. Since then, both cryptocurrencies have shown signs of recovery; according to the latest figures, Bitcoin is trading at around $57,496 and Ethereum at $2,530.
In addition to geopolitical concerns and the resulting large liquidations across many asset classes, market jitters were attributed to growing concerns about a potential U.S. recession. Fueled by fears about the yen’s declining purchasing power against the U.S. dollar, the Bank of Japan’s recent rate hike has raised questions in markets that favor riskier assets, leading to a widespread sell-off.
ETH market cap currently at $293 billion. Chart: TradingView.com
Ethereum ETF Performance Amid Market Volatility
Ethereum ETFsdespite the broader market sell-off, have managed to bring a fair amount of inflows to the table, which has come as a surprise to some investors. This is a significant change as these assets had previously seen a decline in outflows. With a growing number of investors exposed to volatility via ETFs, market observers say the current environment is different from previous cycles.
These solutions have made it easier for investors to interact with the crypto market, even during large swings. As trading volume increases, more financial institutions could start recommending ETFs to clients, potentially generating additional inflows.
Outlook and future trends
As the market stabilizes and investors react to the new dynamics brought by spot ETFs, the general mood is cautiously optimistic. While the global crypto market valuation has seen a slight recovery, rising 2% in the past 24 hours to $2.02 trillion, the total value of Bitcoin spot ETFs currently stands at $51.5 billion.
Because Ethereum ETFs serve as a bellwether for institutional interest and adoption of cryptocurrencies, analysts believe their performance will continue to be scrutinized by the masses. The ability of ETFs to provide exposure to digital assets is expected to become more important as the industry evolves and regulatory regimes change, drawing more mainstream investors into the crypto scene.
Main image from ReadWrite, chart from TradingView