Since the US spot Ethereum ETF was listed on July 23, a large amount of funds have flowed out, causing the price of Ethereum to fall by 9%. In addition to the outflow of funds, what other reasons have hindered its price performance?

Despite the launch of Ethereum ETF, ETH price still failed to break through the resistance level of $3,400. The main reason is that the spot Ethereum spot ETF has seen sufficient capital inflow. According to Sosovalue data, the overall performance of ETFs is poor, and the cumulative net breakout is as high as $439.64 million. As shown in the figure below, the fierce selling pressure mainly comes from the severity. On July 29, major spot ETH ETFs including BlackRock, Bitwise and Fidelity showed daily positive inflows.

We also noticed that Grayscale's ETHE saw a faster outflow than GBTC after the sharp drop in the Bitcoin spot market. Bitcoin's share price fell to $66,317. Since the ETF was launched in January, the following chart records the asset losses of the two investment tools since the conversion. GBTC and ETHE asset losses since the conversion

According to Cointelegraph, analysts expect Grayscale’s massive outflows from ETHE “may” decrease this week.

Exchanges have “almost no demand” for ETH

Additionally, Ethereum’s exchange withdrawal volume has decreased significantly since March. Independent analyst Crypto Lion pointed out that this indicator is closely related to the price, indicating "almost no demand."

Crypto Lion noted that the estimated leverage ratio (ELR) played a driving role during the volatility of ETH prices. This indicator reflects the ratio of open interest in futures contracts to exchange balances. The corresponding ELR indicates that the dominant price movement is happening in futures/perpetual contracts, which is usually short-lived or volatile. He said:

“After the ETH ETF was approved, the ETH price fluctuated in a range. However, with no significant withdrawals and the ELR issue unresolved,

In addition, Coinbase's data shows a similar second demand shortage phenomenon. In the 2024 quarter, Coinbase's ETH premium index continued to decline. When it reached its full-year high in March, the index coincided with ETH's peak, but it has now turned negative. This negative premium indicates that U.S. consumers lack purchasing power and spot demand has decreased.

In May 2024, the potential approval of an Ethereum ETF increased Coinbase’s spot buying volume, which had a bullish impact on its price. The Coinbase Premium Index also surged above 0.15, indicating the presence of demand from ETH spot buyers. As mentioned above, the current downward trend of the index has had an opposite effect on ETH prices.