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Worst Timing for ETH: Senior Analyst Discusses Lacklustre ETF Performance
- Ether ETFs have started trading but interest remains behind expectations.
- A lot has to do with current market conditions and sentiment, analysts have called the launch poor timing.
- Bitcoin continues to increase dominance which also affects ETH performance.
Lacklustre ETF Launch
The recent U.S. launch of six ether-tracking exchange-traded funds (ETFs) has seen lacklustre interest. With just under US $10 million ($15.8 million) invested in their first week, according to Reuters which used figures collated by CoinShares. This coincided with a broader outflow from Ethereum (ETH) products and a challenging economic environment marked by conflict in Ukraine and the Middle East.
Vetle Lunde of K33 Research commented (via Reuters) on the poor timing, as Treasury yields rose significantly in that week and investors moved away from risky assets due to looming higher interest rates. Ether’s value decreased by 3.5% this month, and its market size has slightly reduced.
Source: CoinMarketCap
In stark contrast, the ProShares Bitcoin Strategy ETF received around US $570 million ($900 million) on its first trading day in October 2021. This reflects a broader shift in institutional investment sentiment, as many who drove the 2021 crypto boom now show diminished interest in digital assets amidst uncertain macroeconomic conditions.
Not a Good Timing for ETH
Notably, global Bitcoin ETFs witnessed net outflows from August to early October. These ETFs, popular with traditional investors, provide a simpler way to invest in crypto via stock exchanges without direct crypto ownership.
Ben McMillan, chief investment officer at IDX Digital Assets, told Reuters,
Investors are battening down the hatches and looking at how to make their portfolios more defensive. Speculative assets – even with a compelling growth thesis – are just a much lower priority now.
Ben McMillan He added that his company is adopting a more cautious investment approach until there’s a clearer understanding regarding Federal Reserve policy and the potential for a recession.
Meanwhile, Bitcoin Takes Ethereum Share Away
YouTuber and Analyst Benjamin Cowen stated, “While everyone keeps obsessing over BTC spot ETFs, the ETH/BTC capitulation continues.”
Cowen showed a chart highlighting the increasing Bitcoin dominance. The overall implication is that if altcoins like Ethereum have already lost value due to Bitcoin’s pump (and the associated shift of funds), they are in a weakened position.
Thus, if Bitcoin were to suddenly decline which Cowen calls “bend the knee”, these altcoins would have even greater difficulty maintaining their value because they’ve already been weakened, hence he said, “the altcoin market has nowhere to hide”.
Author
Aaron Feuerstein
Aaron Feuerstein is a freelance writer based in Melbourne. His focus is on decentralised finance and the regulatory space surrounding blockchain. He holds a Master's in Accounting. When he is not studying the latest legal case, he enjoys his time as a modest but eager hobby cook.
