Ethereum investment deflates
Investment products in ether (ETH), Ethereum’s cryptocurrency, globally, saw net outflows of $912 million last week.
These outflows remained constant over that period, affecting a broad group of exchange-traded product (ETP) issuers, including U.S.-listed ether spot ETFs. The latter faced an outflow of $788 million, with no ETFs recording net inflows.
Despite this pullback, cumulative inflows into ETH-based investment funds so far this year reach $11.2 billion, reflecting sustained interest in the cryptocurrency over the long term, according to a report by investment firm CoinShares.
The performance of these investment products, especially spot ETFs, directly influences the price of ETH. These funds buy and hold ETH to back their stocks, making them a key factor in price dynamics. When investors withdraw capital, managers may be forced to sell some of their ETH holdings to cover redemptions, increasing supply in the market. Without demand to compensate for this movement, it generates downward pressure on the value of the asset.
This was reflected in the price of ETH, which stalled between $3,300 and $3,400 during the week, after reaching a new all-time high last August that surpassed the record set in November 2021.
Meanwhile, bitcoin (BTC) investment products posted an opposite performance, with net inflows of $524 million last week, according to the report. This suggests an investor preference for bitcoin over cryptocurrencies, even against a backdrop of uncertainty.
In the bigger picture, digital asset investment products faced total outflows of $352 million last week. This move occurred despite expectations of an upcoming U.S. interest rate cut, as reported by CriptoNoticias.
Jerome Powell, chairman of the Federal Reserve, is expected to announce this measure next Wednesday. A cut in rates would make it easier to access loans, injecting liquidity that could boost assets such as stocks, bitcoin, and other cryptocurrencies.
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