May 23, 2024
Ethereum's Struggle Continues: 4th Week of Negative Outflows
Altcoins News

Ethereum’s Struggle Continues: 4th Week of Negative Outflows

Ethereum, the second-largest cryptocurrency by market capitalization, continues to face challenges as investment products based on its platform saw negative outflows for the fourth consecutive week. This comes amidst a backdrop of positive sentiment in the broader digital asset market, with inflows into various crypto-based investment products reaching significant levels.

Ethereum’s Struggle

According to a recent report by CoinShares, Ethereum experienced outflows amounting to $22.5 million last week, marking the fourth consecutive week of negative flows. This trend contrasts with many other top altcoins, which saw positive inflows during the same period. Litecoin led the way with $4.4 million in weekly inflows, followed by Solana with $4 million and Filecoin with $1.4 million.

Source: CoinShares

Market Performance

Despite the outflows, Ethereum’s price showed some resilience, rising by 6.8% in the 24 hours leading up to 11:45 am UTC. However, on a weekly basis, Ethereum is up by only 2.3% and down by 8.2% over the past month, according to CoinMarketCap data. In contrast, Solana, often considered an “Ethereum killer” due to its scalability and transaction throughput, has seen its native token, SOL, outperform Ether. SOL rose by 24% over the past month, while Ethereum fell by 6.2%, as per TradingView data.

Source: CoinMarketCap

Investor ETF Appetite

Despite the overall positive sentiment in the digital asset market, there are signs that investor appetite for exchange-traded funds (ETFs) may be on the decline. CoinShares reported that while there were significant inflows totaling $646 million into digital asset investment products, ETF investors’ appetite seems to be moderating. The flow levels weekly have not reached the heights seen in early March, and volumes have declined to $17.4 billion for the week, compared to $43 billion in the first week of March.

Source: TradingView

Bitcoin ETFs and Short Investments

Since the approval of spot Bitcoin ETFs in January, they have accumulated over 834,000 Bitcoin worth $60.4 billion in total on-chain holdings, accounting for 4.24% of the current BTC supply, according to Dune data. However, short Bitcoin investment products saw outflows for the third consecutive week, totaling $9.5 million, indicating a potential minor capitulation among bearish investors, according to CoinShares.

Conclusion

While the broader digital asset market continues to show positive momentum, Ethereum-based investment products face challenges with consecutive weeks of outflows. The performance of other cryptocurrencies like Solana highlights the competitive landscape within the industry, while fluctuations in investor appetite for ETFs and short investments add further complexity to the market dynamics.

Image by upklyak on Freepik

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