Spot Ether ETFs Register Second Week of Outflows as Bitcoin Gains Institutional Momentum
Ethereum-focused exchange-traded funds (ETFs) have now experienced two consecutive weeks of capital outflows, signaling a noticeable shift in investor sentiment. This downturn contrasts sharply with the growing demand for Bitcoin ETFs, which continue to attract significant institutional inflows.
In the week ending Friday, Ether (ETH) spot ETFs collectively recorded net outflows totaling $243.9 million, according to data provided by SoSoValue. This comes on the heels of the previous week’s even larger exodus of $311 million. The combined outflows highlight a cooling period for Ethereum investment vehicles after enjoying a sustained period of strong inflows earlier in the year.
To date, total cumulative inflows into all Ether spot ETFs have reached $14.35 billion. However, net assets under management currently stand at $26.39 billion, which accounts for approximately 5.55% of Ethereum’s overall market capitalization. Friday alone saw an additional $93.6 million withdrawn from ETH ETF products, with BlackRock’s ETHA leading the decline, registering $100.99 million in redemptions. In contrast, Grayscale’s ETHE and Bitwise’s ETHW managed to draw modest inflows, though not enough to offset the broader trend.
While Ether sees declining interest, Bitcoin ETFs are experiencing a resurgence in demand. Over the same week, spot Bitcoin (BTC) ETFs saw net inflows of $446 million, reflecting renewed confidence from institutional investors. Friday capped the week with an additional $90.6 million added to BTC ETF products.
Cumulatively, Bitcoin ETFs have now attracted $61.98 billion in inflows, with total net assets reaching $149.96 billion — representing roughly 6.78% of Bitcoin’s market cap. BlackRock’s iShares Bitcoin Trust (IBIT) spearheaded the weekly inflow with $32.68 million, followed closely by Fidelity’s FBTC, which added $57.92 million. These two funds continue to dominate the space, with IBIT managing $89.17 billion in assets and FBTC holding $22.84 billion.
Vincent Liu, Chief Investment Officer at Kronos Research, explained the divergence as a marked rotation from Ethereum to Bitcoin. He pointed to the growing narrative of Bitcoin as “digital gold” — a store-of-value asset that investors increasingly seek during periods of macroeconomic uncertainty and in anticipation of potential interest rate cuts.
“Bitcoin’s appeal as a resilient investment amid global instability is attracting institutional capital,” Liu noted. “Ethereum, on the other hand, is waiting for a new catalyst to reignite investor interest.”
Ethereum’s recent underperformance is further exacerbated by declining on-chain activity and a lack of momentum in decentralized finance (DeFi) and NFT sectors, both of which heavily rely on the Ethereum network. This stagnation makes it difficult for Ether ETFs to compete for investor attention without a new catalyst or improvement in network fundamentals.
Looking ahead, market analysts expect Bitcoin inflows to remain strong, particularly if macroeconomic conditions favor risk-on assets or if central banks move toward monetary easing. Ethereum’s potential for recovery, however, hinges on a revival in blockchain usage, technological upgrades, or positive regulatory developments.
Additionally, investor appetite might rekindle for Ethereum with the successful implementation of scaling solutions like Ethereum 2.0 and Layer 2 networks, which aim to reduce transaction fees and increase throughput. These innovations could enhance user experience and bring more activity back to the ecosystem, indirectly benefiting ETF performance.
Another key factor could be the rise of Ethereum-based tokenization platforms, which aim to bring real-world assets on-chain. If adoption of tokenized securities grows, Ethereum could reassert its position as the leading smart contract platform, drawing renewed institutional attention.
Moreover, regulatory clarity in the U.S. and other major markets could serve as a significant tailwind. Any positive rulings related to Ethereum’s classification as a commodity — rather than a security — may open doors for more investment products and broader institutional participation.
It’s also worth noting that Ethereum continues to be the backbone of the decentralized application (dApp) economy. If the next wave of Web3 applications gains traction, Ether could benefit from increased demand for gas fees and staking, potentially reversing the current trend of ETF outflows.
In conclusion, while Bitcoin ETFs are currently enjoying a resurgence driven by macroeconomic factors and a compelling store-of-value narrative, Ethereum ETFs remain in a holding pattern. The future performance of ETH investment vehicles will likely depend on a combination of network growth, technological innovation, and external market catalysts. Until then, institutional capital appears to be favoring the relative safety and simplicity of Bitcoin.