The second day of trading for the spot Ethereum ETFs took a negative turn as more than $133 million were withdrawn from the largest financial vehicles. This drastic outflow led to a significant drop in the underlying asset’s price, causing a 10% decline in just one day. This unexpected turn of events highlighted the initial fears that the approvals for these ETFs might result in a sell-the-news moment.
After a successful first day of trading, where over $106 million poured into the spot Ethereum ETFs, the trend reversed on the second day. BlackRock’s ETHA and Bitwise’s ETHW, which had initially attracted substantial investments, now faced a significant withdrawal of funds. Grayscale’s ETHE, despite experiencing outflows of $484 million, managed to maintain some stability due to the strong performance of other ETFs. However, the overall sentiment on July 24 was bearish, with a total of $133.3 million being withdrawn from the market. Only Fidelity’s FETH saw positive inflows of $74.5 million, highlighting the lackluster demand for these newly-launched products.
Unsurprisingly, the underwhelming performance of the spot Ethereum ETFs had a direct impact on the price of ETH. The asset plummeted from almost $3,500 to a multi-day low of $3,130, marking a significant 10% decline in just one day. Although there has been a slight recovery since then, ETH is still down by 8% and is trading below $3,200. The sharp drop in price has led to over $100 million in long ETH positions being liquidated within a day, representing a third of the total positions.
Leading up to the launch of the spot Ethereum ETFs, there were speculations that the market reaction would mirror a sell-the-news moment. These predictions seem to have materialized on the second day of trading, as investors swiftly withdrew funds and caused a downward spiral in the market. Despite the initial excitement surrounding these new financial products, the reality of market dynamics seemed to have a different plan.
The second day of trading for the spot Ethereum ETFs painted a different picture than the successful debut. Dismal outflows, volatile market response, price impact, and the anticipated sell-the-news moment all contributed to a challenging day for these financial vehicles. The market’s reaction serves as a reminder of the unpredictability and volatility of the cryptocurrency space, urging investors to exercise caution and carefully assess their investment strategies.
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