Ark Invest’s Ethereum ETF may transform a difficult market after $108 million in institutional sell-offs made Ethereum the least preferred ETP asset.
In 2023, institutions have lost interest in Ethereum, selling upwards of nine digits of the asset so far in the year.
The second-ranked cryptocurrency experienced $4.8 million in outflows during the last week, surpassing $108 million in sales for the year, according to CoinShares’ most recent data. According to James Butterfill, head of research for CoinShares, this makes it the digital asset that huge entities sell the most of.
It was rated by the analyst as the “least loved digital asset” for investors in exchange-traded products (ETPs), outperforming Tron by more than $50 million.
After Cathie Wood’s Ark Invest submitted the first application for an Ethereum ETF in the United States last week, all of that might soon change. And that information comes as the arduous bear market continues, the network turned inflationary, and on-chain activity fell.
According to CoinShares, what Ethereum has seen this year is common among digital assets.
According to their weekly report released this morning, sentiment against institutions buying cryptocurrency is still negative. It revealed selling for the fourth week in a row, with outflows totaling $59 million over the previous seven days.
James Butterfill reported that the current run of withdrawals has reached $294 million, or 0.9% of the total assets under management (AUM).
North America was the region that sold the most, with Canada and the US dumping $17.6 million and $12.3 million respectively in the last seven days. With sales of $20 million, Germany led the way across the Atlantic and into Europe.
The U.S. dollar, according to Butterfill, is the primary cause of the frantic selling. Due to the “market’s belief we are in a soft landing scenario,” it has recently displayed strength, producing eight consecutive weeks of green candles.
He believes that even so, when the year comes to a close, it will “increasingly be seen that this isn’t the case,” particularly if high interest rates start to take effect.
The trading activity decreased this week despite the CoinShares report from last week highlighting a lot of under-the-radar trade with volumes surging by 90% to $2.8 billion.
According to Butterfill, volumes “are super low,” averaging “just” $2.3 billion each day over the previous month as opposed to the monthly average of $7 billion. With a 73% decline to $743 million during the previous seven days, these figures were even further from reality.
The expert told Decrypt that this signals a “apathetic investor” but added that the market had previously witnessed a situation extremely similar to this before the last two Bitcoin halvings.
Bitcoin suffered the most last week, as major players sold out a staggering $69 million worth of the commodity, despite being profitable the week before.
The greatest weekly inflows into Bitcoin short products since March, totaling $15 million, added to the bearishness. Timing-wise, this is intriguing because the March inflows also occurred during a period of increased regulatory uncertainty, according to Butterfill.
What lies ahead? According to Butterfill, a lot of investors are waiting to see what the Fed will do with interest rates this month, with any potential dollar weakness “likely to be supportive for Bitcoin.”
However, the researcher came to the conclusion that the quick increase in fuel prices would cause CPI to come in above estimates. Additionally, he mentioned FTX, saying to Decrypt, “There are the FTX asset sales’stock overhangs’ potentially to deal with too.”
