- Ethereum ETFs see $119M outflows in late June, raising questions about market sentiment before mid-July launch.
- SEC’s July 8 deadline for Ethereum ETF filings could lead to approval mid-July, with major asset managers optimistic.
- Analysts predict Ethereum ETFs may outperform Bitcoin post-launch, despite recent Ether underperformance.
As Ethereum exchange-traded funds (ETFs) approach their anticipated mid-July launch, market dynamics reveal major investor activity and regulatory updates. In the final week of June, Ethereum (ETH) investment products saw substantial outflows, with investors withdrawing $61 million, according to CoinShares’ weekly analysis.
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This marked the highest outflow since August 2022. The total outflows for the last two weeks of June reached $119 million, bringing June’s total to $37 million in withdrawn funds. Year-to-date, Ether funds have seen $25 million in outflows, making them the worst-performing asset in terms of net flows.
Regulatory Developments and Anticipation
The deadline for updated documentation and amended S-1 forms submitted by ETF applicants is July 8th, as announced by the Securities and Exchange Commission (SEC). This comes after a Bloomberg story stated that asset managers, including as Invesco, BlackRock, Fidelity, and Ark 21Shares, are hopeful that the first U.S. ETFs to invest directly in Ethereum would be approved.
Analysts, including Eric Balchunas and Nate Geraci, have speculated on the timing of the approval. While Balchunas initially predicted a pre-July 4 green light, he now anticipates regulatory movement the week of July 8 due to recent amendments requested by the SEC.
Potential Impact on Market Dynamics
The launch of Ethereum ETFs could shift market dynamics to some extent. Analysts from K33 Research, Vetle Lunde, and David Zimmerman suggest that Ethereum ETFs might outperform Bitcoin in the weeks following their launch. They predict that these ETFs, expected as early as July 15, could boost Ether’s price.
Meanwhile, Bitcoin may face selling pressure as $850 million in funds are returned to creditors of the defunct exchange Mt. Gox starting this week. Despite Ethereum’s recent underperformance compared to Bitcoin, the introduction of spot Ethereum ETFs is expected to revive the market. Bitcoin ETFs, launched in January, have amassed $52 billion in assets, demonstrating the potential impact of similar products for Ethereum.
Future Outlook and Industry Skepticism
While asset managers and analysts remain hopeful, there is skepticism about the SEC’s approval timeline. The industry had anticipated a swifter approval process, hoping that spot Ethereum ETFs would stimulate the market akin to the earlier Bitcoin ETFs. However, the necessary regulatory amendments and the upcoming deadlines suggest a more cautious approach by the SEC.
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