The second day of trading for the spot Ethereum ETFs saw a significant shift in investor sentiment, with over $133 million being withdrawn from the largest financial vehicles. This led to a massive price drop in the underlying asset, with Ethereum’s price plummeting by 10% in a single day. This stark reaction confirmed earlier predictions that the approvals of these ETFs might result in a sell-the-news moment.
Comparing Performance
On the first day of trading, the spot Ethereum ETFs had a strong inflow of funds, with over $106 million pouring into the market. BlackRock’s ETHA and Bitwise’s ETHW emerged as the top performers, attracting $266.5 million and $204 million, respectively. Even Grayscale’s ETHE managed to maintain its position despite experiencing outflows of $484 million. However, the scenario changed drastically on the second day. Grayscale’s product witnessed outflows of $326.9 million, while the demand for other ETFs faltered, leading to an overall withdrawal of $133.3 million. Only Fidelity’s FETH experienced significant inflows of $74.5 million.
Market Impact
As anticipated, the lackluster performance of the newly launched ETFs had a negative impact on Ethereum’s price. The asset’s value dropped from nearly $3,500 to a multi-day low of $3,130, reflecting a 10% decline in a short period. Although there has been some recovery since then, Ethereum is still down by 8% for the day, trading below $3,200. The market saw over $100 million in long ETH positions liquidated within a day, accounting for one-third of the total amount ($292 million). Prior reports had suggested that the launch of spot Ethereum ETFs could trigger a sell-the-news reaction, and these predictions seem to have materialized.
The introduction of spot Ethereum ETFs has had a profound impact on the cryptocurrency market, with significant withdrawals and price volatility being witnessed in a short span. While the initial excitement led to a surge in inflows, the following day brought about a stark contrast with massive outflows and a notable price drop. Investors and analysts will closely monitor the market dynamics as they navigate through this period of uncertainty and adjust their strategies accordingly.
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