Ether's Price Fell After Its Spot ETFs Launched. Can It Bounce Back?
Ether (ETH), the underlying cryptocurrency of the Ethereum network, is down about 3% after last week's launch of spot ether exchange-traded funds (ETFs) on U.S. exchanges. However, prices are still up more than 10% from the days before the surprising reversal in May of Securities and Exchange Commission (SEC) crypto policy that ultimately led to the launch of these ETFs.
The primary reason for the declining ether price since the launch is the legacy Grayscale Ethereum Trust (ETHE). It held roughly $10 billion worth of ether before its conversion to an ETF, and in the week since its conversion has seen outflows of more than $1.8 billion, according to Farside Investors.Analysts have pointed to ETHE's relatively high fee of 2.5% as one reason investors have ditched the fund, putting downward pressure on ether's price.
While much of the funds exiting ETHE have found their way into other spot ether ETFs, the cumulative net outflows for the entire spot ether ETF market currently stand at $406.4 million.
It should be noted that a practically identical situation occurred earlier this year in the spot bitcoin ETF market with the Grayscale Bitcoin Trust (GBTC), with bitcoin suffering a parallel drop of about 10% in the first couple weeks of spot bitcoin ETF trading.
According to MV Capital partner Tom Dunleavy, August is likely to continue as a month of net outflows for spot ether ETFs. «At $1B or so a week in ETH outflows, we should settle in a new steady state for ETH by the end of August,» Dunleavy posted on the social media platform X.
Crypto market analysts have varying opinions on where ether's price could be headed after the outflows from the legacy Grayscale Ethereum Trust have subsided.
Previously, Bitwise Chief
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