Crypto Investment Products Suffer Ethereum Merge Jitters, Prompting Outflow
The upcoming Ethereum merge has created uncertainty among institutional investors. Despite the uptick in the price of Ether (ETH), the native token of the Ethereum blockchain, the asset has been the primary focus of outflows in terms of digital asset funds.
The data was first highlighted by Coinshares' Digital Asset Fund Flows Weekly Report. Per the report, crypto investment products saw outflows totaling $63million in the last week. Outflows attributed to ETH amounted to $62 million of this amount.
"Digital asset investment products saw outflows totaling US$63m… Ethereum was the primary focus of the outflows, totaling US$62m last week, this comes despite the improved certainty of the Merge," the report said.
It adds that the week's performance, while relatively small in size in comparison to other weeks' movements, makes the fifth consecutive week in which crypto funds have seen outflows. It also notes that the outflow "perhaps highlights a concern amongst investors that the event might not go as planned."
According to the regional breakdown of the outflows, Canada and the U.S. were the largest contributors totaling $60 million and $10 million respectively in the last five weeks. Similar to ETH, Bitcoin (BTC) funds have also been on a five-week-long streak of outflows.
The ETH market has been experiencing the "merge Jitters" beyond just outflows from crypto funds. According to data from crypto data firm Kaiko reported by Bloomberg, more traders are shorting ETH in the derivatives market as the merge gets closer.
This has resulted in the funding rate of ETH dipping to its most negative since July 2021, and diverging sharply from that of Bitcoin. The trend has been attributed to several reasons including that traders could
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