Ethereum Sustains $300 Million Monthly Crypto Fund Outflows

Ethereum, the world’s second-largest cryptocurrency, is facing a challenging year as institutional investors have been rapidly shedding their holdings. In a surprising turn of events, ETH has experienced significant outflows from institutional investors in 2023, with sales reaching over $108 million year-to-date.

This staggering figure marks Ethereum as the most sold digital asset among large entities, raising questions about its future performance and investor sentiment.

According to data from leading digital asset management firm CoinShares, digital asset investment products witnessed outflows of $59.3 million in the past week alone. This adds to a troubling trend, with nearly $300 million in total outflows over the last four weeks. 

ETH, in particular, has fallen out of favor with institutional investors, earning the title of the “least loved digital asset amongst ETP investors this year,” as noted by CoinShares research head James Butterfill in a recent report.

Institutional Exodus And Dwindling Ethereum Sentiment

Butterfill pointed to the gloomy sentiment surrounding Ethereum and attributed it to ongoing concerns over regulatory scrutiny and the recent strength of the US dollar. 

He said:

“We believe continued worries over-regulation of the asset class and recent dollar strength are the most likely reasons for this.”

The timing of these outflows is also noteworthy, mirroring the period of heightened regulatory uncertainty that led to short bitcoin inflows in March.

Bitcoin investment products, too, faced a tumultuous week, with outflows totaling nearly $69 million. In a surprising twist, short bitcoin funds saw a substantial influx of a little over $15 million, marking the largest single week of inflows for this product since March.

The contrasting fortunes of Bitcoin and short Bitcoin funds suggest that investors are seeking alternatives in the cryptocurrency space amidst the market’s volatility.

Ethereum (ETH) is currently trading at $1607.5. Chart by TradingView.com 

A Glimmer Of Hope On The Horizon?

Despite Ethereum’s recent woes, there may be a glimmer of hope on the horizon. Ark Invest, led by renowned investor Cathie Wood, has applied for the first Ethereum exchange-traded fund (ETF) in the United States.

This move could potentially reignite institutional interest in Ethereum and provide a much-needed boost to the cryptocurrency. Ethereum has been grappling with challenges such as inflationary changes to its network and declining on-chain activity due to the ongoing bear market, making the approval of an ETF a pivotal development for its future.

The shifting sentiments of ETH institutional investors, coupled with regulatory uncertainties and market fluctuations, underscore the need for adaptability and resilience in the world of digital assets. 

Ethereum’s response to these challenges will determine its trajectory in the coming months, leaving the cryptocurrency community eagerly awaiting the outcome of Ark Invest’s ETF application as a potential turning point in its journey.

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