The second day of trading for the spot Ethereum ETFs painted a different picture compared to the initial excitement. More than $133 million were withdrawn from the largest financial vehicles, causing a ripple effect in the market. The price of the underlying asset, Ethereum, reacted with a significant drop of 10% in just one day. This unexpected turn of events highlighted the fact that the approvals of these ETFs might have resulted in a sell-the-news moment, contrary to the initial reports.
CryptoPotato previously reported a successful first day of trading for the spot Ethereum ETFs, with over $106 million flowing into the market. BlackRock’s ETHA and Bitwise’s ETHW led with impressive inflows of $266.5 million and $204 million, respectively, overshadowing the outflows from Grayscale’s ETHE. However, on the following day, the sentiment shifted drastically. Grayscale’s product experienced a massive $326.9 million outflow, contributing to a total withdrawal of $133.3 million for the day. Only Fidelity’s FETH managed to buck the trend with $74.5 million in inflows, indicating a lack of overall demand for the newly launched ETFs.
Impact on Ethereum Price
The lackluster performance of the spot Ethereum ETFs had a direct impact on the price of ETH. The asset plummeted from nearly $3,500 to a multi-day low of $3,130, marking a sharp 10% decline within a day. Despite a partial recovery, ETH remained 8% down for the day, trading below $3,200. The market also witnessed over $100 million in long ETH positions being liquidated, accounting for a third of the total amount ($292 million). This rapid decline in price and liquidation of positions underscored the market’s reaction to the spot ETF launches.
Leading up to the launch of spot Ethereum ETFs, there were speculations that these products might trigger a sell-off in the market once they became operational. The events of the second trading day seemed to validate these concerns, as significant outflows and price drops followed the initial excitement surrounding the ETFs. This serves as a reminder that market sentiment and investor behavior play a crucial role in shaping the impact of new financial instruments on the crypto space.
The second day of trading for spot Ethereum ETFs highlighted the volatile nature of the market and the influence of investor sentiment on asset prices. The initial influx of funds on the first day was quickly overshadowed by massive outflows, leading to a sharp decline in Ethereum’s price. As the market continues to absorb the impact of these ETFs, it remains to be seen how future trading sessions will unfold and whether investors will regain confidence in these financial vehicles.