Spot Bitcoin exchange-traded funds in the United States experienced their third consecutive day of net outflows, while spot Ethereum ETFs also saw a return to negative flows.
According to data from SoSoValue, the 12 spot bitcoin exchange-traded funds recorded $71.73 million in net outflows on Aug. 29, marking the third consecutive day of outflows.
FIdelity’s FBTC led the lot, logging $31.1 million in outflows on the day — its highest recorded outflows since Aug. 6. Grayscale’s GBTC continued its outflow streak, with $22.7 million leaving the fund, pushing its total outflows to date to $19.78 billion.
BlackRock’s IBIT, the largest spot Bitcoin ETF by net assets, recorded its first net outflows since May 1, amounting to $13.5 million. Despite this, the fund’s total net inflows remain at $20.91 billion.
Other funds, such as Bitwise’s BITB and Valkyrie’s BRRR, saw outflows of $8.1 million and $1.7 million, respectively. Ark and 21Shares’ ARKB was the only spot Bitcoin ETF to report net inflows, bringing in $5.3 million.
The total daily trading volume for the 12 spot Bitcoin ETFs dropped to $1.64 billion on Aug. 29, down from $2.18 billion the previous day. At the time of writing, Bitcoin (BTC) was down 0.4% over the past day, trading at $59,342 per data from crypto.news.
Meanwhile, the spot Ethereum ETFs in the U.S. returned to negative flows, recording $1.77 million in net outflows on Aug. 29, following modest inflows of $5.84 million the day before.
Grayscale’s ETHE was the only spot Ethereum ETF to report outflows, losing $5.3 million, which was partially offset by $3.6 million in net inflows into the Grayscale Ethereum Mini Trust. The remaining seven spot Ether ETFs saw no activity on that day.
The total trading volume for the nine ETH ETFs fell to $95.91 million on Aug. 29 from $151.57 million on Aug. 28. At the time of publication, Ethereum (ETH) was also up 0.9%, exchanging hands at $2,529.
Spot Bitcoin exchange-traded funds in the United States experienced their second consecutive outflow day on Aug. 28, while spot Ethereum ETFs broke their nine-day outflow streak.
According to data from SoSoValue, the 12 spot Bitcoin ETFs logged net outflows of $105.19 million, led by ARK 21Shares ARKB for the second consecutive day, with $59.3 million leaving the fund. The investment product saw an even larger outflow of $102 million the previous day.
Fidelity’s FBTC reported net outflows of $10.4 million, while VanEck’s HODL saw $10.1 million in outflows. Meanwhile, Bitwise’s BITB and Grayscale Bitcoin Mini Trust also witnessed negative flows of $8.7 million and $8.8 million respectively.
Grayscale’s GBTC saw the smallest outflows of $8 million on the day — its lowest withdrawal since mid-July. However, its total outflows to date have amassed to $19.75 billion.
Per Coinglass data, Grayscale has seen more than 60% of its Bitcoin holdings in the GBTC reduced since the fund was converted into an ETF. Once the largest Bitcoin ETF, the fund has now been overtaken by BlackRock’s IBIT, which became the top fund just five months after its launch. IBIT continues to dominate the Bitcoin ETF market, holding about 357,736 BTC, worth approximately $22.2 billion.
The remaining six BTC ETFs remained neutral on the day, marking the second consecutive day without inflows for Bitcoin ETFs.
At the time of writing, Bitcoin (BTC) was up 0.3% over the past day, trading at $59,640, per data from crypto.news.
Spot Ether ETFs break 9-day outflow streak
Meanwhile, the nine-spot Ethereum ETFs collectively saw inflows of $5.84 million on Aug. 28, a flip following nine consecutive days of outflows.
BlackRock’s ETHA and Fidelity’s FETH were the only funds to report inflows of $8.4 million and $1.3 million, respectively, on the day. These inflows were offset by Grayscale’s ETHE, which logged outflows of $3.8 million, bringing its total outflows since its launch date to $2.55 billion.
These investment vehicles have also seen their daily trading volume rise to $151.5 million on Aug. 28, an increase over the previous day. The spot Ether ETFs have experienced a cumulative net outflow of $475.48 million to date. At the time of publication, Ethereum (ETH) was also up 3.5%, exchanging hands at $2,544.
Spot Bitcoin exchange-traded funds in the United States have seen net outflows of $127.05 million on Aug. 28 led by ARK 21Shares’ ARKB.
Data from SoSoValue indicates that the 12 U.S. spot Bitcoin exchange-traded funds experienced net outflows on Aug. 28, breaking an eight-day streak of positive inflows. During this eight-day period, these funds had attracted $756 million in inflows.
On Tuesday, the U.S. spot Bitcoin funds saw net outflows amounting to $127.05 million. Notably, ARK 21Shares’ ARKB led the outflows with $101.97 million in negative flows — its largest outflow to date, according to SoSoValue’s data. Grayscale’s GBTC reported net outflows of $18.32 million, while Bitwise’s BITB saw $6.76 million in outflows. Valkyrie’s BRRR was not updated at the time of writing.
Meanwhile, the remaining eight funds, including BlackRock’s IBIT, saw no flows on the day. Excluding BRRR, the total trade volume for U.S. spot Bitcoin funds reached $1.2 billion. Since January, these funds have collectively seen net inflows totaling $17.95 billion.
At the same time, the broader market is seeing developments that could impact investor behavior.
Nasdaq has filed with the U.S. Securities and Exchange Commission to list Bitcoin Index Options, which will track Bitcoin’s price via the CME CF Bitcoin Real-Time Index. This move, pending regulatory approval, aims to improve market transparency and offer investors better tools to manage and hedge their crypto positions.
Additionally, CME Group is planning to introduce smaller-sized Bitcoin futures contracts, which could appeal to retail investors.
At the time of writing, Bitcoin (BTC) was down 5.8% over the past day, trading at $59,160, per data from crypto.news.
Ether ETFs continue to record outflows
Meanwhile, the nine-spot Ethereum ETFs collectively saw a significant drop in outflows, which stood at $3.45 million on Aug. 28, marking the ninth consecutive day of outflows.
Grayscale’s ETHE led the outflows once again, with $9.2 million leaving the fund, bringing its total outflows to the $2.55 billion mark since its launch on July 23. Meanwhile, Fidelity’s FETH and Bitwise’s ETHW were the only offerings to record inflows of $3.9 million and $1.9 million, respectively. The remaining six ETH ETFs saw no flows on the day.
These investment vehicles have also seen their daily trading volume rise to $129.9 million on Aug. 28, an increase over the previous day. The spot Ether ETFs have experienced a cumulative net outflow of $481.32 million to date. At the time of publication, Ethereum (ETH) was also down 8%, exchanging hands at $2,463.
The number of crypto millionaires nearly doubled in 2024, reaching 172,300 as spot Bitcoin ETFs and other crypto assets surged.
The global population of crypto millionaires has surged 95% over the past year, driven by the rise of spot Bitcoin exchange-traded funds and other cryptocurrencies, according to a new research report by New World Wealth and Henley & Partners.
The report reveals that 172,300 individuals worldwide now hold more than $1 million in crypto, nearly doubling from 88,200 in 2023. Data shows that during the same period, the number of Bitcoin (BTC) millionaires more than doubled to 85,400.
Crypto wealth has also expanded significantly, with 325 individuals now classified as crypto centimillionaires —those holding $100 million or more in crypto — and 28 crypto billionaires. The report attributes such a rapid surge to the growth of spot Bitcoin ETFs, which have amassed over $50 billion in assets since their January launch, igniting a surge in institutional participation.
Commenting on the data in an interview for CNBC, New World Wealth’s head of research Andrew Amoils pointed out that of the six new crypto billionaires created in 2023, five owe their wealth to Bitcoin, underscoring its “dominant position when it comes to attracting long-term investors who buy large holdings.”
Investors seeking crypto friendly countries
Crypto is reshaping not just wealth but also the demographics of where the rich live and work. Analysts at Henley & Partners note that many newly wealthy crypto individuals are seeking to relocate to tax-friendly and crypto-friendly jurisdictions, saying they have seen a “significant uptick in crypto-wealthy clients seeking alternative residence and citizenship options.
To rank countries based on their tax and regulatory environments, Henley & Partners developed an index, placing Singapore in the top spot due to its “supportive banking system, significant investment, comprehensive regulations such as the Payment Services Act, regulatory sandboxes, and alignment with global standards.”
Spot Bitcoin exchange-traded funds in the United States have been seeing increased investor confidence as the cumulative net inflows reach a new all-time high.
According to data provided by Farside Investors, spot Bitcoin (BTC) ETFs recorded a net inflow of $202.6 million on Aug. 26. The total net inflows in the investment products surpassed the $18 billion mark.
The COO of Bitget Wallet Alvin Kan told crypto.news that “investors are likely turning to more stable assets.”
“The trend reflects investors’ confidence in Bitcoin, which will help drive the price of Bitcoin and the stability of the market in the longer run.”
Alvin Kan, the COO of Bitget Wallet, talking on spot BTC ETFs’ inflows.
Notably, most of the inflows, worth $224.1 million, came from BlackRock’s IBIT. Per Farside Investors, Franklin Templeton’s EZBC and WisdomTree’s BTCW recorded $5.5 million and $5.1 million in inflows, respectively.
On the other hand, Bitwise’s BITB, Fidelity’s FBTC and VanEck’s HODL funds saw $16.6 million, $8.3 million and $7.2 million in outflows. The remaining spot BTC ETFs stayed neutral.
Despite the increasing inflows into spot Bitcoin products, the asset’s price declined by 1.3% in the past 24 hours and is trading at $63,000 at the time of writing.
The COO of Bitget Wallet, formerly known as BitKeep, believes that BTC’s bullish momentum majorly depends on the U.S. Federal Reserve’s rate cuts. This could also help the market to become “fully active,” he added.
“In the short term, the Federal Reserve’s announcement of potential rate cuts could lead to increased market liquidity, a shift in investor behavior towards riskier assets, and potential volatility due to ongoing geopolitical tensions.”
Alvin Kan, the COO of Bitget Wallet, told crypto.news.
While Bitcoin ETFs have been thriving, spot Ethereum (ETH) ETFs in the U.S. saw their eighth consecutive day of net outflows yesterday. Per data from Farside Investors, these investment products registered $13.2 million in net outflows, coming from ETHE, FETH and EZET.
Ethereum slipped by 1.7% over the past day and is currently changing hands around the $2,700 mark.
The newly launched MicroStrategy leveraged ETF, trading under the ticker $MSTX, is rapidly gaining traction on Wall Street.
The MSTX ETF has amassed $127 million in assets within just six days of its debut, said Eric Balchunas, senior ETF Analyst for Bloomberg.
The ETF, which seeks to deliver 175% of MicroStrategy’s daily stock return, has been trading at over $100 million in volume per day, showing strong investor interest in MicroStrategy and Bitcoin (BTC).
On August 23, the ETF surged by 20% after a volatile week that included a 10% decline the previous day. Due to its high volatility and potential for significant short-term gains and losses, Balchunas described the ETF as the “mechanical bull” of ETFs.
Issued by Defiance ETFs, known for its thematic and leveraged funds, $MSTX allows investors to amplify their exposure to Bitcoin, as MicroStrategy’s stock is widely viewed as a proxy for the cryptocurrency.
MicroStrategy’s goals
MicroStrategy is one of the largest corporate holders of Bitcoin. The company recently announced plans to raise $2 billion by selling its class A shares to further invest in Bitcoin and repay debt.
In its Q2 financial results, MicroStrategy reported acquiring 12,222 Bitcoin at a total cost of over $805 million, bringing its total Bitcoin holdings to 226,500.
South Korea’s National Pension Service has invested $33.75 million in 24,500 shares of MicroStrategy, and other funds like Japan’s GPIF and Michigan’s Retirement System are also participating through ETFs. This growing institutional interest suggests a cautious but notable shift towards integrating Bitcoin into traditional investment portfolios.
Ethereum has outperformed Bitcoin in terms of price performance, especially when looking at time frames since its inception, halving years, and bull market periods. However, ETH has consistently underperformed since the bear markets of 2018-2019 and 2022-2023. In the 2024 halving year, for the first time, Ethereum is considerably trailing behind Bitcoin. In fact, it has been underperforming against Bitcoin for the past three years.
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ETH/BTC ratio plummets to 3.5-year low
Although fractals, a concept where similar patterns repeat over different timeframes, are not a foolproof method for predicting future outcomes, they provide valuable context into what might lie ahead.
In previous halving years, the ETH/BTC ratio broke down from its support line around September to December, only to begin an uptrend in the first quarter of the following bull market year. A similar scenario could unfold in 2024, as Ethereum has once again broken through its support. However, this time, the situation is more concerning. Unlike previous halving years, where the support line was relatively recent, the current support at 0.05 has held strong for the past 3.5 years, which suggests a more bearish outlook for Ethereum.
Another point of comparison can be drawn from 2019 when the Federal Reserve started cutting interest rates—a move that might recur in September 2024. Back in 2019, from the time the Fed began cutting rates until it stopped, the ETH/BTC ratio dropped by 22%.
Not only did the ratio drop in all these cases, but Ethereum’s price itself also performed negatively, except for 2020. However, the critical issue isn’t just whether the price went up or down; it is also whether holding Ethereum was the better investment decision. History has shown that, in similar circumstances, holding Bitcoin proved to be the more advantageous choice—and 2024 may very well continue that trend.
Ethereum supply reverses course and turns inflationary.
The supply of Ethereum had been decreasing steadily after the 2022 Merge. The decrease in Ethereum’s supply works through a mechanism called “burning,” which was introduced with the Ethereum Improvement Proposal (EIP) 1559 in August 2021. Basically, a portion of the transaction fees paid in ETH is burned or permanently removed from circulation. This reduces the total supply of ETH over time, especially during periods of high network activity when transaction fees are higher.
The reason why the supply of Ethereum started to drop following the 2022 Merge was because the network transitioned from a proof-of-work to a proof-of-stake consensus mechanism. Under PoW, new ETH was continuously issued to miners as rewards for validating transactions, which contributed to an increase in Ethereum’s total supply. However, with the Merge and the shift to PoS, the issuance of new ETH significantly decreased because validators, who now secure the network, receive much lower rewards compared to miners.
The Dencun upgrade in March 2024 marked a turning point, reversing this deflationary trend and making Ethereum’s supply inflationary once again. It introduced proto-danksharding and “blobs,” which optimize data storage and reduce transaction fees on layer-2 networks. Although Dencun improved scalability and made transactions more cost-effective, it also led to a major decrease in the amount of ETH being burned, which had been a critical factor in keeping Ethereum’s supply deflationary.
As a consequence, Ethereum’s supply began to increase, with over 213.5K ETH added to circulation since the Dencun upgrade. For comparison, Ethereum’s supply is now at the same level it was back in May 2023.
Negative ETF Flows Continue
Many expected that the approval of Ethereum ETFs would boost ETH by increasing demand and driving prices higher. However, this has not been the case so far. Instead, ETF outflows have become a concern, with a total of $465 million flowing out since trading began. The main driver of the trend is Grayscale’s ETHE, which has seen massive outflows, overshadowing the positive inflows from other Ethereum ETFs. The scale of the outflows from ETHE is so large that it creates a net negative effect when considering all Ethereum ETFs collectively.
An Ethereum ETF holds a certain amount of Ethereum, and each share represents a fraction of the total Ethereum it holds. When many investors want to buy ETF shares, the demand can push the price of the ETF shares above the actual value of the underlying Ethereum. In this case, Authorized Participants (APs), large financial institutions that work closely with the ETF provider, step in. The APs purchase ETH on the open market and exchange it with the ETF provider for new ETF shares, which they then sell to investors in the market at a higher price, making a profit. The process increases the supply of ETF shares, which helps bring the share price back in line with the value of the underlying assets.
Conversely, when there is low demand for the ETF, the price of its shares might fall below the value of the underlying Ethereum. Here, APs buy the undervalued ETF shares from the market, return them to the ETF provider, and receive Ethereum in exchange. They can then sell Ethereum on the open market at a higher price, profiting from the arbitrage. This reduces the supply of ETF shares and helps the price align more closely with the value of the underlying Ethereum.
Simply put, the ETH selling from APs as they redeem ETF shares could be one of the reasons why ETH’s price is down and struggling to recover.
Conclusion
While current data might suggest a bearish outlook for Ethereum, it remains a fundamentally strong asset. The number of active addresses on both its main chain and Layer 2 networks continues to increase. Ethereum still leads the blockchain industry, holding the top spot in total value locked (TVL) across DeFi platforms, with many projects being developed on its ecosystem. Furthermore, Ethereum continues to see regular development and upgrades.
However, given the current market conditions and the ongoing ETF outflows, Ethereum may not be the best investment in the short term, particularly through the rest of 2024. Yet, as we look forward to 2025, starting in Q1, Ethereum is likely to regain its momentum and could once again outperform Bitcoin in terms of returns, much like it has in previous market cycles.
Spot Ethereum exchange-traded funds, or ETFs, had seven consecutive days of outflows shedding over $5.7 million in assets on Friday, Aug. 23, bringing the cumulative figure to $464 million, data by SoSoValue shows.
Cumulative net assets locked in these Ethereum (ETH) ETFs stand at about $7.65 billion.
The Grayscale Ethereum Trust has $5 billion followed by the Grayscale Mini Ethereum Trust with $1.01 billion. It is followed by ETFs from Blackrock, Fidelity, Bitwise, and VanEck.
Institutional investors reluctance
In a note to Bloomberg, crypto analyst Noelle Acheson noted that many institutional investors are a bit reluctant to invest in Ethereum ETFs and prefer to focus on Bitcoin (BTC) for their diversification efforts.
However, she expects that Ether ETFs will likely see more inflows in the future, akin to the metal industry, where gold ETFs hold over $100 billion in assets while those tracking silver have less than $20 billion.
The opportunity cost
The other reason why Ethereum ETFs are struggling is the opportunity of holding them vis-a-vis buying Ether.
Buyers of the cheapest Ether ETF — Grayscale Mini Ethereum — will pay a small expense ratio of 0.15%. However, they will also avoid making money through staking.
Data by StakingRewardsshows that Ethereum yields about 3% or $300 if you invest $10,000 in it.
The data shows that Ethereum’s net staking inflow has risen in 20 of the last 30 days, reaching over $93.7 billion. Therefore, since Ether ETFs track Ethereum prices, many investors are opting for Ether.
Ethereum is underperforming Bitcoin
Ethereum vs Bitcoin YTD performance | Source: TradingView
Another likely reason is that Bitcoin is doing better than Ether this year. It has risen by over 45% while ETH is up by less than 20%.
This performance is likely because Ethereum is facing substantial competition from Solana (SOL) and Tron (TRX).
Tron has become a major player in stablecoin transactions, handling daily volumes of over $40 billion. Similarly, Solana has seen substantial traction because of its meme coins. As a result, in July, Solana was the biggest chain in DEX volumes, handling over $58 billion.
Ethereum’s ETF performance will likely be a red flag for financial services companies considering launching other altcoin ETFs like Solana and Avalanche.
Despite declining Bitcoin prices and a challenging market environment, institutional ownership of U.S. spot Bitcoin ETFs increased last quarter.
Institutional ownership of U.S. spot Bitcoin ETFs rose to 24% by the end of the second quarter of 2024, according to analysts from H.C. Wainwright. This is up from 21.4% in the prior quarter, according to newly released 13-F filings and data aggregated by Coinbase.
This growth occurred despite a challenging market environment that saw the total assets under management for these ETFs drop 13% quarter-over-quarter to $51.8 billion, driven by declining Bitcoin (BTC) prices.
Source: Farside Investors and Coin Metrics. Graph source: H.C. Wainwright
Among the most notable new institutional investors were Goldman Sachs, with $412 million in ETF shares, and Morgan Stanley, with $188 million, though a portion of these assets is likely held for clients.
Bitcoin ETF inflows
Spot Bitcoin ETFs saw a significant inflow of $61.98 million on Aug. 19, led by BlackRock’s IBIT with $92.7 million. This was despite some ETFs like Bitwise’s BITB and Invesco Galaxy’s BTCO experiencing outflows. The total cumulative inflows for Bitcoin ETFs have now surpassed $17.4 billion.
Investment advisors now account for 36.6% of total institutional holdings in spot Bitcoin ETFs, up from 29.8% in the first quarter, while hedge fund holdings decreased to 30.5% from 37.7%.
Despite these market fluctuations, spot Bitcoin ETFs experienced $2.4 billion in net inflows during the quarter, signaling sustained institutional interest in the crypto space.
