Grayscale’s Ethereum Trust (ETHE) has seen a notable reduction in outflows during its second week of trading, following a $1.5 billion outflow in the initial week.
According to blockchain analysis firm Arkham Intelligence, ETHE experienced an 80% drop in outflows as the second week progressed.
Why Grayscale’s ETHE Outflows Declined
On July 29, approximately 108,800 ETH, worth $367.6 million, was withdrawn from ETHE to Coinbase. By August 2, this had slowed to about 24,9000 ETH, valued at around $78.4 million.
Coinbase analysts suggest that the ETHE outflows were declining because they might have been front-loaded compared to earlier trends observed with the Grayscale Bitcoin Trust (GBTC). GBTC had also experienced substantial outflows when it was converted in January. However, they pointed out that the percentage of outflows from ETHE surpasses that of GBTC.
“Structural factors contributed to shares of GBTC that were locked and unable to be sold until later in the cycle, whereas no such impediments exist for ETHE,” Coinbase analysts stated.
Farside data reveals that since the launch of spot Ethereum ETFs, ETHE has experienced a total outflow of over $2 billion. Consequently, its assets under management have decreased from approximately $9 billion to $5.97 billion. In contrast, its smaller version, the mini Ethereum trust (ETH), has maintained over $1 billion in assets under management and reported net inflows of about $201 million since its inception.
Ethereum ETF Flows. Source: Farside Investors
Meanwhile, the new spot Ethereum ETFs, aside from Grayscale’s, have shown impressive performance. Nate Geraci, president of the ETF Store, highlighted that these ETFs have attracted over $1.5 billion in less than two weeks. He noted that this amount places them among the top five ETF launches this year.
Despite these substantial inflows, Ethereum’s price has not fared well. BeInCrypto data shows ETH has dropped by over 10% in the past week, falling below $3,000. Geraci explained that ETFs are merely vehicles for accessing markets and do not influence their performance.
“ETFs represent only a small fraction of the overall market. There are many other factors driving price movements. ETFs provide access but do not control the markets,” he asserted.