The much-anticipated launch of spot Ethereum exchange-traded funds (ETFs) has failed to ignite sustained upward momentum for the cryptocurrency, with Ethereum’s price enduring a slight correction since the launch of these funds last week to now trade at $3,300.
Despite the price drop, on-chain data paints a complex picture with a surge in large Ethereum transactions, indicative of whale activity, showing a move to a monthly high. While this could signal accumulation, it may also reflect profit-taking or portfolio rebalancing.
Despite decreasing $ETH prices, large transaction volume reached a monthly high following the ETFs release, indicating institutional demand. pic.twitter.com/AjhKuWyPnK
— IntoTheBlock (@intotheblock) July 27, 2024
According to data from IntoTheBlock, on-chain data reveals a surge in activity among Ethereum’s largest investors. Whale transactions — those exceeding $100,000 — reached a monthly high on July 24, with a staggering 3.5 million ETH moved in a single day, with the record being broken the next day after 3.68 million ETH ($12.1 billion) were moved in a single day.
While this frenzied activity might suggest accumulation, a closer look at the data paints a more complex picture. While inflows to large wallets increased by 12.42% over the past week, outflows soared by a more substantial 38.17%, resulting in a net outflow of 100.65%. This suggests that whales are, on balance, moving Ethereum off trading platforms.
As CryptoGlobe reported, spot Ether ETFs saw a total trading volume of over $360 million just 90 minutes after being launched, according to Bloomberg intelligence analyst Eric Balchunas, who noted that this trading volume would rank these ETFs “about 15th overall” when it comes to trading volume, which “is top 1%.”
Normal exchange-traded fund launches, Balchunas added, often see over $1 million worth of trading volume on the first day, but spot Ether ETFs, which provide investors with exposure to the performance of the second-largest cryptocurrency by market capitalization, have greatly outperformed that volume.
The SEC, it’s worth noting, has raised questions about whether ETH itself should be classified as a security under its purview, while the Commodity Futures Trading Commission (CFTC) classifies both BTC and ETH as commodities.
Ether relies on a Proof-of-Stake consensus algorithm that allows holders to stake their funds to help secure the network, and earn yield on their holdings as a result. The SEC has sued blockchain technology firm Consensys over its offering of access to staked Ether on MetaMask.
None of the spot Ether ETFs currently being traded are able to stake the underlying ETH they hold.
Featured image via Unsplash.
