The cryptocurrency market continues to witness capital outflows from spot Ethereum ETFs, while Bitcoin funds are beginning to attract capital back.
Ethereum ETF Sees Record Capital Outflows
According to data from CoinGlass, in the last 12 trading sessions, spot ETFs have seen outflows of $370 million, marking the longest streak of outflows since their launch. Among them, the two funds with the highest outflows are iShares Ethereum Trust (ETHE) and Grayscale Ethereum Trust (ETHE), with outflows of $146 million and $106 million, respectively.
During the same period, the price of Ethereum fell from $2,200 on March 5 to around $1,950. This price drop was influenced by concerns about Ethereum's performance compared to rival blockchains, which is also part of a broader downturn in the crypto market due to macroeconomic concerns.
Bitcoin ETF Recovers, Ethereum Needs New Momentum
While Ethereum funds are struggling, spot trading has begun to attract $660 million in the past week, marking a recovery in capital flows after a period of decline.
Explaining the trend of capital outflows from the Ethereum ETF, Robert Mitchnick, BlackRock's Head of Digital Assets, pointed out that one of the fund's limitations is the lack of staking. Meanwhile, staking Ethereum is one of the key incentives attracting investors.
SEC Considers Allowing Staking in Ethereum ETF
Last week, a proposal was submitted to allow staking in Bitwise's ETF fund, while Grayscale, 21Shares, and Fidelity are also seeking to amend rules to support staking. The SEC has received these proposals and recently met with Coinbase to discuss liquidity risks when staking ETH in an ETF.
Mitchnick emphasized that: 'The staking interest rate is an important factor in generating profits from investing in Ethereum.'
Slight Increase in Ethereum Staking
Despite capital outflows from the Ethereum ETF, the amount of staked Ethereum continues to rise, reaching 33.8 million ETH according to data from beaconcha.in. This is an increase of 0.5% compared to 33.6 million ETH staked on March 5, when the Ethereum ETF began to experience outflows.
The Future of the Ethereum ETF?
Since their launch in July 2023, spot Ethereum ETFs have recorded capital flows of $2.45 billion, with BlackRock's fund attracting $587 million. However, this figure is still very small compared to over $35 billion poured into Bitcoin ETFs. Analysts suggest that ETH's sluggishness reflects investors waiting for a stronger catalyst to drive recovery.
According to research firm BRN, 'This indicates that institutional risk appetite for BTC is increasing, while ETH is still struggling to regain growth momentum.'
Could the Ethereum ETF turn the tide if staking is allowed? The answer may become clearer in the near future as the SEC's proposed rule changes are considered.
