Ethereum News Today: Institutional Flight to Safety as Ethereum ETFs Lose $788M

Ethereum's price struggles to break above the $4,500 level, with technical indicators suggesting the possibility of a drop to $3,550. This has been accompanied by declining spot Ethereum inflows and ETF outflows, signaling weakening demand. Over the past week, U.S. spot Ethereum ETFs experienced a total outflow of $787.6 million, with some products recording single-day withdrawals exceeding $300 million [2]. The outflows contrast sharply with the record inflows of $3.87 billion seen in August, highlighting a shift in investor sentiment [2].

Data from SoSoValue reveals that Ethereum ETFs saw a cumulative outflow of $787.6 million over four days, with the largest exodus occurring on Thursday at $446.8 million [1]. Meanwhile, Bitcoin ETFs recorded net inflows of $250.3 million over the same period, suggesting a repositioning of capital toward the more stable digital asset [2]. Analysts attribute this trend to macroeconomic anxieties, particularly in the wake of soft labor data and recession fears, which have pushed institutional investors toward Bitcoin as a safer bet [2].

Ethereum’s futures open interest has also declined, falling by 18% to $58 billion from its all-time high of $70 billion on August 23. Open interest measures the total number of outstanding futures contracts across major exchanges like CME, Binance, and OKX. A drop in OI is generally interpreted as a sign of reduced leverage and market participation, which could signal weaker bullish sentiment [1]. For example, a similar 18% drop in OI between July 28 and August 3 coincided with a 15% decline in Ethereum's price.

Ethereum network activity has also seen a decline, with Ethereum revenue dropping by 44% in August despite hitting all-time price highs. This decline in revenue is partially attributed to the Dencun upgrade in March 2024, which reduced transaction fees for layer-2 scaling networks using Ethereum as a base. This has impacted Ethereum’s deflationary mechanism and potentially weakened its price momentum [1].

Technically, Ethereum has been forming a descending triangle pattern on its daily chart since mid-August. This bearish reversal pattern suggests that a break below the support level at $4,200 could send the price toward $3,550, a drop of 18%. Analysts, however, have expressed some optimism that a bounce could occur before a deeper correction. Ted Pillows, an investor and trader, noted that Ethereum's price is "looking strong" above $4,200 and suggested a possible retest of the $3,800–$3,900 range before a reversal [1]. Meanwhile, Santiment data shows that Ethereum whales have increased their holdings by 14% over five months, indicating long-term confidence in the asset [2].

Despite the recent outflows, Ethereum's fundamentals—such as staking growth and DeFi activity—remain strong, according to Konstantin Anissimov of Currency.com. The analyst described the outflows as a "timing rather than conviction" move, emphasizing that Ethereum's core metrics continue to perform well [2].

Source: [1] Why is Ethereum price failing to break $4.5K? (https://cointelegraph.com/news/why-is-ethereum-price-failing-to-break-4-5k) [2] Ethereum ETFs Shed $788M Over Four Days in Institutional ... (https://finance.yahoo.com/news/ethereum-etfs-shed-788m-over-113308429.html)