Grayscale’s ETH ETF outflows could subside this week – Analyst

Massive outflows from Grayscale’s recently converted Ether exchange-traded fund (ETF) — the Grayscale Ethereum Trust (ETHE) — should subside by the end of this week, causing an upward shift in the price of ETH, according to an analyst. 

In a July 30 post to X, Steno Research senior analyst Mads Eberhardt said it’s “likely” the massive outflows from Grayscale’s ETHE will subside this week. His comments come as Ether (ETH $3,345) ETFs posted their fourth day of outflows at $98 million. 

Source: Mads Eberhardt

Since its conversion, ETHE has hemorrhaged over $1.7 billion in outflows. This figure accounts for nearly 18% of the $9 billion initially contained in the ETHE before its conversion to an ETF on July 24.

The figure has held back Ether ETFs from making net inflows for the last four consecutive days despite the other eight ETH ETFs posting consistently positive flows. 

BlackRock’s iShares Ethereum Trust (ETHA) has received the largest cumulative inflows, at $500 million. The Bitwise Ethereum ETF (ETHW) has received $276 million, and the Fidelity Ethereum Fund (FETH) came in third with $244 million in net inflows.

Ether ETFs have seen four consecutive days of outflows. Source: Farside Investors

However, Eberhardt sees the strong early outflows as a reason for bullishness in the short term.

“The Grayscale Bitcoin ETF outflow subsided significantly following the eleventh trading session,” he said. 

Since the Grayscale Ethereum ETF has experienced a much higher outflow relative to AUM [assets under management], we believe that peak outflow will occur sometime this week.

“So, what happens once we move past the peak of these Grayscale outflows? Take a guess,” Eberhardt wrote in a follow-up post to X.

Pseudonymous trader Evanss6 echoed Eberhardt’s view with a side-by-side comparison of the launch of spot Bitcoin (BTC $66,924) ETFs and Ether ETFs in a July 30 post to X.

Evan wrote that the outflows from Bitcoin ETFs bottomed on the seventh trading day, and the bottom occurred when cumulative Grayscale Bitcoin Trust (GBTC) outflows reached 13.2% of the original fund.

Source: Evanss6

He added that Bitcoin proceeded to “rip [approximately] 92% in 50 days” following the bottoming of GBTC outflows.

In contrast, he noted that Grayscale’s Ether ETF was “sold much faster” than GBTC and had already reached 17.3% in just four days, with a shallower overall pullback on the price of ETH relative to BTC at the time.

Meanwhile, Samara Cohen, BlackRock’s investment chief for ETF and index investments, said there is strong demand for ETH exposure from institutional investors, adding that crypto-based ETFs will begin making their way into “model portfolios” by the end of 2024.

“Investors really want to get their ETH exposure, especially if they’re going to use it in the context of an overall portfolio in an ecosystem they have confidence in,” she said.