The second day of trading for the spot Ethereum ETFs took a significantly different turn compared to the first day. Over $133 million were withdrawn from these financial vehicles, leading to a massive price drop of 10% for the underlying asset. This reaction in the market confirmed the initial speculation that the approvals of the ETFs might result in a sell-the-news moment.
Initially, the spot Ethereum ETFs had a strong start on July 23, with more than $106 million flowing into the market. BlackRock’s ETHA and Bitwise’s ETHW were the frontrunners, attracting $266.5 million and $204 million, respectively. These new ETFs even managed to offset the outflows from Grayscale’s ETHE, which saw $484 million exiting the fund.
However, the situation changed drastically on July 24. Grayscale’s ETHE experienced $326.9 million in outflows, while the demand for other ETFs faltered, leading to total withdrawals of $133.3 million for the day. Only Fidelity’s FETH saw significant inflows of $74.5 million. This shift in investor sentiment had a direct impact on the price of ETH, causing it to plummet from nearly $3,500 to a multi-day low of $3,130, representing a 10% decline.
As a result of the underwhelming performance of the newly launched ETFs, ETH continued to struggle, remaining 8% down on the day and trading below $3,200. The market saw over $100 million worth of long ETH positions being liquidated within a day, accounting for a third of the total amount. This market reaction highlighted the concerns raised by earlier reports that suggested the spot Ethereum ETFs could trigger a sell-off once launched.
The volatile nature of the crypto market was once again on display with the introduction of spot Ethereum ETFs. While the initial trading activity was promising, the subsequent withdrawals and price drop served as a reminder of the unpredictable nature of digital assets. Investors and traders in the crypto space must remain vigilant and adaptable to navigate through such market fluctuations effectively.
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