Ethereum News Today: Investors Flee Ethereum ETFs as Unstaking Deluge Looms

Ethereum ETFs recorded a net outflow of $422 million on Tuesday, as BlackRock and Fidelity liquidated holdings amid a broader market correction and rising unstaking volumes on the Ethereum network. This marked the second-largest single-day outflow for the asset since the launch of spot Ether ETFs earlier this year, according to data from Farside and SoSoValue. The outflows followed a $196 million withdrawal on Monday, bringing the two-day total to over $600 million in redemptions.

BlackRock’s iShares Ethereum Trust ETF (ETHA) and Fidelity’s Fidelity Ethereum Fund (FETH) were the largest contributors, with ETHA recording $87 million in outflows and FETH reporting $79 million in losses on Monday alone. By Tuesday, Fidelity’s outflow from FETH had climbed to $156 million, while BlackRock’s ETHA saw only modest redemptions of $6 million. These movements reflect growing investor caution as Ethereum’s price dropped by approximately 6.5% over the same period, according to CoinGecko.

The outflows coincided with a surge in the Ethereum unstaking queue, which reached an all-time high of 910,000 ETH, valued at around $3.9 billion, according to ValidatorQueue. This backlog has extended the waiting time for unstaking to more than 15 days, raising concerns among investors and analysts about potential market volatility. Some analysts, including Bitcoin advocate Samson Mow, have warned of an impending “unstakening,” where rising unstaking volumes could lead to further downward pressure on ETH prices.

Investor sentiment appears to be shifting within the crypto market, with Ethereum ETFs gaining traction relative to Bitcoin ETFs. As of Monday, Ethereum ETFs held approximately 5% of the total supply of ETH, compared to 6.4% for Bitcoin ETFs, according to data analyst Hildobby. The analyst forecasted that Ethereum ETFs could surpass Bitcoin ETFs in terms of supply held if the current inflow trend continues. However, recent outflows have temporarily stalled this trajectory, with Ethereum ETFs experiencing three consecutive days of net redemptions totaling nearly $1.3 billion.

Despite the outflows, Ethereum ETFs remain a major force in the market, with over $2.6 billion in assets under management as of Tuesday. The outflows do not erase the broader positive trend, as Ethereum ETFs have seen cumulative net inflows of more than $12 billion in recent months. This momentum is attributed to growing institutional adoption and expectations of regulatory clarity for future ETF products. Analysts remain cautious but suggest that the recent redemptions are part of a broader market cycle and do not necessarily signal long-term disinterest in the asset class.

Source:

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

[2] Bitcoin, Ether ETFs post almost $1B outflows as prices slide (https://cointelegraph.com/news/crypto-funds-bleed-bitcoin-outflows-surge-5x-ether-outflows-double)

[3] US Bitcoin and Ethereum ETFs face $1 billion outflow amid ... (https://cryptoslate.com/us-bitcoin-and-ethereum-etfs-face-1-billion-outflow-amid-market-dip/)

[4] Ethereum ETFs Experience $196.6M Outflow, Led by ... (https://coincentral.com/ethereum-etfs-experience-196-6m-outflow-led-by-blackrock-fidelity/)

[5] US Ethereum ETFs face second-largest outflow of $196.6 ... (https://cryptoslate.com/insights/us-ethereum-etfs-face-second-largest-outflow-of-196-6-million-in-a-day/)

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