U.S. spot Ethereum exchange-traded funds (ETFs) experienced significant outflows over a four-day period from September 2 to September 5, totaling $787.6 million. This marked one of the most substantial capital flight events since the inception of these products. The outflow peaked on September 5, when Grayscale’s ETHE witnessed a staggering $309.9 million exit. Fidelity’s FETH saw another significant retreat, with $216.7 million leaving on September 4. BlackRock’s ETHA displayed mixed activity, initially attracting $148.8 million in inflows but reversing course to lose $309.9 million the next day. Thursday alone accounted for $446.8 million in outflows, representing the biggest single-day decline since August 4, as reported by Farside Investors.
Conversely, Bitcoin ETFs demonstrated resilience, securing $332.8 million in inflows on September 2 and $300.5 million on September 3. However, they faced outflows of $222.9 million and $160.1 million on September 4 and 5, respectively. Despite these latter losses, Bitcoin ETFs managed to record net inflows of $250.3 million over the same period.
Industry analysts pointed to structural factors contributing to Ethereum’s outflow. One key issue is that U.S. Ethereum ETF products are not permitted to stake their holdings, which diminishes the appeal of Ethereum exposure during periods of market pullback. According to Farzam Ehsani, co-founder and CEO of VALR, the outflows should be interpreted not as a lack of confidence in Ethereum, but rather as a typical repositioning exercise by institutional players who may have opted to take profits following a robust influx of capital in August.
The notable outflows starkly contrast with August’s impressive $3.87 billion in inflows into Ethereum ETFs, where institutional investors displayed significant interest. Analyst Konstantin Anissimov, Global CEO of Currency.com, highlighted that the rapid nature of the outflows is just as significant as the volume, indicating a decisive shift in investor sentiment. He attributed this shift to growing macroeconomic anxiety, particularly surrounding soft labor data and recession concerns, which have driven institutional funds towards Bitcoin as a perceived safer asset amidst market turbulence.
In the current market landscape, Ethereum is trading at $4,304, remaining unchanged for the day and down 3.3% over the past week. In contrast, Bitcoin is priced at $111,811, reflecting a 0.5% daily gain and a slight 2.1% increase over the last seven days. This performance highlights Bitcoin’s relative stability during these tumultuous times.
Interestingly, while the ETF market for Ethereum suffered, data from Santiment reveals that large holders, or “whales,” have increased their Ethereum positions by 14% over the past five months. This suggests a divergence in trading strategies, placing long-term fundamentals—such as staking growth, DeFi activity, and network health—on a solid footing despite recent outflows. Anissimov summarized the situation, describing the recent capital flight as a matter of timing rather than a fundamental rejection of Ethereum’s potential.
