Ethereum Slows as ETF Uncertainty Continues – What’s Next?

• Over the past two weeks, investors have withdrawn $120 million from ETH-focused investment products.
• The launch timeline for Ethereum spot ETFs has been changed after the SEC asked issuers to re-submit revised draft S-1 documents.

Ethereum (ETH) was trading at around $3,448 on July 2, which has not changed in the last few hours but is in line with overall positive narrative of July.

Meanwhile, ETH bulls were targeting new highs above $3,450 and betting on the upside potential stemming from the hype surrounding Ethereum spot ETFs.

New products expected to debut in the US later this month could help propel The ETH/USDT pair has broken above the resistance at $3,630, where it was rejected on June 17.

Bullish speculators suffered minor losses on July 1 after Ethereum failed to maintain momentum above $3,520.

On the night from Friday to Saturday, ETH tried to break out of the descending channel on the 4-hour chart, but failed to do so by the time the article went to press.

Interestingly, the recent rally towards $3,500 will not signal a triumph for the bulls if ETH fails to break above the resistance zone at $3,520-3,550.

Ethereum adoption by institutions

In its digital asset flow report released on Monday, CoinShares noted that Ethereum investment products saw outflows of $60.7 million last week.

The figure marked the largest negative 7-day flow in almost two years, bringing the two-week cumulative outflows to $119 million.

The report further highlighted that Ethereum was the worst-performing cryptocurrency in 2024 in terms of net flows, with flows of $37 million and $25 million on a MTD and YTD basis, respectively.

American Ethereum spot ETF

AND ETF spot on American Ether came close this summer, after the Securities and Exchange Commission (SEC) approved the 19b-4 filings of eight potential issuers on May 23.

However, the ETF products have not yet been approved to launch, pending approval of their S-1 registration statements.

This last failure in the approval process was placed at the door of the U.S. securities regulator. Last week, the SEC reviewed the S-1 forms from issuers and requested a resubmission containing its comments by July 8.

As a result, the launch date of spot Ethereum ETFs has been postponed to mid- or late-July.

Market expectation

Last week, Bernstein analysts Gautam Chhugani and Mahika Sapra predicted that Ethereum spot ETFs would enjoy slightly lower demand upon launch compared to Bitcoin (BTC) ETFs because they share most of the same sources of demand.

The co-authors also pointed to the “lack of ETH staking functionality” in approved spot Ether ETFs as a deterrent that could reduce interest in the products.

Since their introduction earlier this year, Bitcoin ETFs have attracted $55 billion to date.

Although capital inflows have declined since the February peak, analysts forecast the amount will exceed $100 billion by the end of 2025.

On the other hand, JP Morgan forecasts that Ethereum ETFs could see net inflows of $3 billion by the end of the year ($6 billion if staking is allowed).

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Read Ethereum (ETH) Price Forecast 2024-25

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JP Morgan also expected immediate market acceptance be moderately negative due to possible profit-taking by investors who purchased Grayscale Ethereum Trust (ETHE) in anticipation of its conversion to an ETF.

Separately, last week, Bitwise CIO Matt Hougan designed that Ethereum-based ETFs will attract $15 billion net in the first dozen or so months.