Impact of Bitcoin and Ether ETFs on Cryptocurrency Market
The recent performance of U.S.-listed bitcoin (BTC) and ether (ETH) spot exchange-traded funds (ETFs) has significantly influenced the cryptocurrency market, contributing to the downward price pressures observed this week. Specifically, bitcoin has seen a decline of approximately 6%, while ether has experienced a more pronounced drop of about 10%. These fluctuations raise questions about the underlying market dynamics and investor sentiment surrounding these digital assets.
On October 3, investors withdrew a staggering $54.2 million from bitcoin ETFs, marking the third consecutive day of net outflows. This has resulted in an aggregate three-day total of $361.2 million in withdrawals, as reported by Farside Investors. Notably, Ark’s ARKB ETF led the outflows with a significant withdrawal of $58.0 million, followed closely by Fidelity’s FBTC, which saw $37.2 million exit its funds. In contrast, BlackRock’s IBIT ETF experienced an inflow of $36.0 million during the same period, indicating a mixed sentiment among investors.
Despite the recent outflows, the cumulative investment in these 11 ETFs has reached an impressive total of $18.5 billion since their inception. Current data indicates that investors are, on average, still in profit on their investments, with returns ranging between 3% and 10%. The average cost basis for deposits into these ETFs varies, with figures reported between $54,911 and $59,120, according to analysis from Glassnode.
The methodology utilized by Glassnode involves price stamping of bitcoin deposits to ETFs, specifically focusing on the top three ETF issuers. This approach provides a rough break-even point for ETF investors. According to their findings, the cost basis for investors in Fidelity’s FBTC is $54,911, while Grayscale’s GBTC stands at $55,943, and BlackRock’s IBIT at $59,120. These cost bases have demonstrated considerable price support for bitcoin, effectively acting as a safety net during market corrections, particularly in the bullish trends observed throughout 2024.
In tandem with the bitcoin ETF trends, ether ETFs have also faced challenges, experiencing a net outflow of $3.2 million on Thursday alone. A significant portion of these outflows originated from Grayscale’s ETHE, which saw withdrawals totaling $14.7 million, bringing its cumulative withdrawals to $2.9 billion. Conversely, BlackRock’s ETHA ETF managed to attract a $12.1 million inflow, showcasing a slight divergence in investor behavior between the two major cryptocurrencies.
Overall, ether ETFs have faced a total outflow of $555.4 million, as highlighted by Farside Investors. This performance reflects broader market concerns and the volatile nature of cryptocurrency investments, especially in light of regulatory scrutiny and changing market conditions.
Despite the recent challenges faced by BTC and ETH ETFs, their performance remains commendable compared to industry standards. According to Nate Geraci, President of the ETF Store, “Out of 525 ETFs launched in 2024, 13 of the top 25 are either bitcoin or ether-related.” This statistic underscores the growing interest and adoption of cryptocurrency-related financial products, even amidst short-term price pressures.
As of the latest reports, bitcoin is trading at $61,608, while ether is valued at $2,391, according to CoinDesk data. The current market conditions highlight the intricate relationship between ETF performance and the broader cryptocurrency landscape, suggesting that investors should remain vigilant and informed as they navigate this dynamic sector.