The initial optimism surrounding the launch of spot Ethereum ETFs quickly turned into disappointment as the second day of trading witnessed significant outflows and a sharp decline in ETH’s price. On July 24, over $133 million was withdrawn from these newly launched financial vehicles, leading to a 10% drop in Ethereum’s price, highlighting the market’s volatile reaction.
Day One: A Promising Start
The first day of trading for spot Ethereum ETFs, on July 23, showed promising results. It reported that over $106 million flowed into these ETFs, with BlackRock’s ETHA and Bitwise’s ETHW leading the charge, attracting $266.5 million and $204 million respectively. Despite a significant $484 million outflow from Grayscale’s ETHE, the market remained optimistic.
Read more: Spot Ethereum ETFs Make $100M Debut: BlackRock Dominates, Grayscale Struggles
Day Two: A Dramatic Turnaround
However, the landscape changed dramatically on the second day. Grayscale’s ETHE saw another $326.9 million in outflows, and the overall withdrawals for the day reached $133.3 million. The enthusiasm for the new ETFs waned, and only Fidelity’s FETH managed to attract significant inflows, totalling $74.5 million. This stark contrast to the first day’s performance highlighted the market’s fickleness and the challenges these new financial products face.
Market Reaction and Price Impact
The substantial outflows had an immediate and severe impact on Ethereum’s price. The asset’s value tumbled from nearly $3,500 to a multi-day low of $3,130, marking a 10% decline within 24 hours. Although ETH has slightly recovered since, it remains 8% down on the day, trading below $3,200. Over $100 million in long ETH positions were liquidated, adding to the market’s turmoil.
Pre-Launch Speculations Come True
Prior to the launch of these spot Ethereum ETFs, there were predictions that the approval of these products might trigger a “sell-the-news” event. The significant outflows and subsequent price drops on the second day seem to validate these speculations, as initial investor excitement gave way to profit-taking and market corrections.