Ethereum ETFs Scored $49M Inflows as ETH Plunged

U.S.-listed spot ether (ETH) exchange-traded funds (ETFs) recorded net inflows of nearly $49 million on Monday amid a 20% drop in its price, showcasing demand for the second-largest token by market capitalization.

Ether price cratered as much as 20% on Monday in its biggest one-day price fall since 2021 as prominent crypto trading firm Jump Crypto moved large amounts of the asset to centralized exchanges in preparation for potential sales. A broader crypto market haircut contributed to the selling pressure, with over $340 million in ETH futures liquidations adding to traders' wounds.

Professional investors bought the dip, however. Data tracked by SoSoValue shows ETH ETFs traded over $715 million, the highest since July 30. BlackRock’s ETHA led inflows at $47 million. Fidelity’s FETH and VanEck’s ETHV recorded $16 million in inflows each.

Grayscale’s ETHE was the only product with outflows at $46 million, while the provider’s smaller Ethereum Mini Trust (ETH) recorded inflows at $7 million.

However, since they first went live for trading on July 23, the products have recorded net outflows of $460 million, indicating that long-term demand for ETH ETFs has yet to fully appear. Bitcoin ETFs, in contrast, recorded over $1 billion in net inflows within their first 12 days of trading.

ETF flows help identify market trends and they broadly show where investors are putting their money.

Meanwhile, some market observers pointed out that applications built on the Ethereum network showed resilience amid the steep declines – a sign of strong fundamentals.

“Ether’s disproportionate price drop was largely driven by the Jump Crypto sell-off and liquidation of other whale wallets,” Alice Liu, lead researcher at CoinMarketCap, told CoinDesk in an email. “On a positive note, LSDFi stood up to the stress test: there’s been no major increase in Lido’s withdrawal queue, and no liquid staking depends on different projects.”

LSDFi refers to liquid staking derivatives finance, a colloquial term for staking and derivatives. The process refers to a set of blockchain-based activities that allow users to earn rewards while maintaining liquidity through derivative tokens.

“Another silver lining for ETH is that the recent liquidation seems to have revived the DeFi market, where activities on DeFi started to pick up significantly on the network. Gas fee has also fallen back to a more manageable level of 10-15 Gwei post the 370 Gwei recorded today,” Liu noted, referring to the fees that users pay to use the Ethereum network.