Ethereum Hits Yearly High in Institutional Activity Post-ETF, Analysts Reflect on ETH Price

Ethereum (ETH) institutional transactions have hit a new high for the year, with transactions over $100,000 surge after spot Ethereum exchange-traded funds (ETFs) hit the market.

Even with more big players getting involved, Ethereum’s price has dropped 4.6% in the last week showing how tricky the market can be. This mix of growing interest from institutions and falling prices has pushed experts to take a fresh look at where Ethereum’s price might go next.

The launch of spot Ethereum ETFs on July 23, 2024, was a big deal for the cryptocurrency leading to a huge spike in large transactions.

Data from IntoTheBlock’s “On-chain Insights” newsletter shows that transactions worth $100,000 or more reached a one-year high.

However, this flurry of large transactions coincides with a 6.52% decline in ETH’s price in just seven days, raising eyebrows among market analysts. 

Grayscale’s Influence: A Double-Edged Sword

In the first three days after their launch, Ethereum ETFs saw net outflows of about $190 million according to Farside Investors data.

A large part of this can be linked to Grayscale’s Ethereum Trust (ETHE), which saw outflows of $1.1 billion as investors acted to make profits, after they had bought at a discount .

Erick Balchunas, senior ETF analyst at Bloomberg, provides some silver lining for those worried about how Ethereum ETFs are doing in their early days. Balchunas said these ETFs are receiving “very healthy” inflows and trading volumes.

However, he warned that the next few days might be “tough” because of outflows from Grayscale’s ETHE, which saw big withdrawals when it launched. Still, Balchunas thinks this current shakiness won’t last long and expects things to settle down soon.

The changing economic scene also makes Ethereum’s price more volatile. Stock markets are having a rough time dropping almost 10% from their recent highs, and this has a knock-on effect on cryptocurrencies.

Political events are adding more ups and downs with the U.S. presidential election coming up. As Donald Trump’s chances of winning changed from 70% to 62%, markets reacted to this uncertainty adding to the overall gloomy mood in the crypto market.

It’s worth noting that Ethereum’s market cap has dropped from more than 50% of Bitcoin’s in September 2022 to around 32% in late July 2024 as per IntoTheBlock’s data.

Even though many traders hoped big institutions would buy in after the ETF launch, early outflows hint that some investors still doubt Ethereum’s near-term prospects.

Reflecting on History: BTC ETF Vs. ETH ETF

Market analysts urge a measured approach in evaluating these early ETF outflows. They point out that history may offer a lesson; Bitcoin’s ETFs also faced significant sell-offs before analysts turned bullish months later. 

Prominent crypto analysts like Lark Davis on his X platform highlighted the potential for Ethereum to mirror Bitcoin’s rebound trend, hinting that the recent volatility could pave the way for future growth once market participants regain confidence.

In a tweet, crypto analyst CryptoJelleNL pointed out that while Ethereum has faced some initial headwinds, this should not overshadow the long-term benefits that ETFs typically bring to an asset. He noted, “Even if it keeps facing headwind in the first weeks, the ETF should be a long-term benefit to ETH price. Be patient.”

Jacob Meyer echoed a similar sentiment, highlighting Ethereum’s recovering trading volume and price movement. In his recent update, Meyer noted, “$ETH volume is recovering, and price is starting to make its way back up. While the Ethereum ETF’s are trading, traders selling the news caused the price to drop…its now recovering. Still, very bullish!”

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