Despite the launch of a spot Ethereum ETF in the US, Ethereum (ETH) is down about 1% and set to end July in the red.
The US spot Ethereum ETF was launched on July 23, and the immediate market reaction was a 9% drop. The current ETH price is down 4.05% since the launch. However, other reasons may have hindered the price performance.
ETHE is seeing faster outflows than GBTC.
According to Sosovalue, the overall ETF numbers have been disappointing, with cumulative net inflows now standing at minus $439.64 million.
The chart below highlights that most of the selling pressure has come at the expense of Grayscale. All other major spot ETH ETFs, including BlackRock, Bitwise, and Fidelity, have seen positive daily inflows as of July 29.
Grayscale has been observed to have outflowed ETHE faster than GBTC since the launch of its spot Bitcoin (BTC) ETF in January. The chart below highlights the asset losses following the conversion of both investment vehicles.
As Cointelegraph reported, the massive outflows from Grayscale’s ETHE are “likely” to subside this week, according to some analysts.
“There is absolutely no demand” for ETH on exchanges
Additionally, exchange withdrawal transactions for Ethereum have declined significantly since March. This indicator is highly correlated with price, suggesting that “there is simply no demand,” according to independent analyst Crypto Lion.
Crypto Lion claims that the estimated leverage ratio, or ELR, has driven ETH price movements during this volatile period. This indicator shows the ratio of open interest in futures contracts to the balance on the corresponding exchange. A high ELR indicates that futures/perps are driving price movements, which are usually short-term or erratic. He stated:
After the approval of ETH ETF, ETH price moves in a range. However, it is recommended to refrain from buying while there is no withdrawal and ELR is not yet resolved.
Coinbase Premium Index Turns Negative
Coinbase data suggests a similar lack of demand. The Coinbase Premium Index for ETH has been falling sharply in Q2 2024. It peaked in March, coinciding with ETH’s yearly high, but is now negative. A negative premium value indicates a lack of buying pressure from U.S. investors, which has led to a drying up of spot demand.
In May 2024, the possibility of an Ethereum ETF approval led to an increase in spot buying on Coinbase, which had a bullish effect on the price. The Coinbase Premium Index also surged above 0.15, indicating demand from ETH spot buyers. As mentioned above, the same indicator is now falling, which has the opposite effect on the ETH price.
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