Ethereum News Today: Ethereum ETFs Lose $197M Amid Rising Unstaking Risks

Spot Ethereum exchange-traded funds (ETFs) experienced a significant $196.7 million outflow on August 18, marking the second-largest single-day outflow since their inception [1]. This figure came after $59 million in outflows on August 15, bringing the two-day total to $256 million. The sell-offs were driven in part by BlackRock and Fidelity, with BlackRock’s iShares Ethereum Trust ETF (ETHA) reporting outflows of $87 million and Fidelity’s FETH seeing $79 million in redemptions [1]. These outflows contrast with a prior eight-day inflow streak that saw over $3.7 billion flow into Ethereum ETFs.

Amid the redemptions, Ethereum’s price declined by approximately 6.5% in the same period [1]. The drop coincided with record-high unstaking queues on the Ethereum network, which had reached 910,000 ETH in value, or $3.9 billion [1]. Validators now face minimum wait times of over 15 days and 14 hours to unstake their holdings. Some market observers, including Bitcoin advocate Samson Mow, have warned of a potential “unstakening,” a term describing the risks of a sudden and large-scale withdrawal of staked ETH from the network [1]. Mow has suggested that ETH’s price relative to BTC could fall to levels as low as 0.03 BTC, significantly below the current rate of 0.036 BTC [1].

Despite the recent outflows, Ethereum ETFs have demonstrated strong institutional adoption over the past year. Year-to-date inflows reached $11 billion, surpassing Bitcoin ETFs in both volume and market share [2]. Ethereum ETFs now hold over 6.3 million ETH, representing more than 5% of the total supply and amounting to $26.7 billion in value [2]. The trend of increasing ETF holdings has led to speculation that Ethereum ETFs could soon surpass Bitcoin ETFs in the percentage of total supply they control, according to Hildobby, a data analyst at Dragonfly [1].

The shift in investor sentiment appears to be part of a broader pattern where Ethereum has been attracting more capital relative to Bitcoin. The ratio of Ethereum supply held in ETFs was at 5% as of August 18, compared to 6.4% for Bitcoin [1]. If the trend continues, Ethereum ETFs could overtake Bitcoin ETFs in total supply representation within weeks. Institutional activity also supports this trend, with recent transfers of $38 million in ETH to institution-linked wallets highlighting continued interest from large investors [2].

However, the recent outflow raises questions about the sustainability of the inflow trend and investor confidence amid market volatility. BRN’s Timothy Misir noted that the $4,400 level has become a critical support for Ethereum [3]. While Ethereum ETFs have shown robust growth, the recent drawdowns suggest that investors may be taking profits after a year of 66% gains [3]. This trend is consistent with broader market behavior, as Ethereum ETFs held by public companies now control over 2% of the total supply [2].

Source:

[1] Spot Ether ETFs See $197M Outflows, Second-Largest Ever (https://cointelegraph.com/news/ether-etfs-197m-outflows-second-largest)

[2] iShares Ethereum ETF Surpasses $11 Billion YTD Inflows (https://thedefiant.io/news/markets/ishares-ethereum-etf-surpasses-11-billion-ytd-inflows-holds-6-3m-eth-spot-etfs-628fdd3d)

[3] Ethereum ETFs Lose $197 Million—Even Worse Than Bitcoin (https://finance.yahoo.com/news/ethereum-etfs-lose-197-million-152531921.html)