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Ethereum ETFs See Record $333M Inflows, Outpacing Bitcoin Funds as Catch-Up Trade Gains Momentum
Improved outlook for the DeFi space and warmer regulatory climate with incoming U.S. administration are main drivers behind the sentiment shift towards ether, LMAX strategist Joel Kruger said.
Dec 1, 2024, 12:31 p.m.
What to know:
- Spot-based ether ETFs recorded their strongest daily inflows on Friday, outpacing their bitcoin counterparts through the day and this week.
- After lagging behind BTC this year, ETH's price outperformed on both a weekly and monthly basis.
- ETH is the "most obvious catch-up trade this cycle," one trader said.
Spot exchange traded funds (ETF) in the U.S. saw record daily inflows on Friday, another sign that the second-largest cryptocurrency is gaining momentum as a catch-up trade after vastly underperforming this year.
The nine products combined booked $332.9 million in net inflows during Friday's shortened trading session, data compiled by Farside Investors shows. BlackRock's iShares Ethereum Trust (ETHA) and Fidelity Ethereum Fund (FETH) led, attracting $250 million and $79 million in fresh funds, respectively.
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Friday was the fifth consecutive session with net inflows for the group, and concluded the second strongest week with $455 million in net inflows, per SoSoValue data. It was a shorter week as U.S. traditional markets were closed on Thanksgiving Thursday.
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Ether ETFs also outpaced flows into their spot bitcoin counterparts, which gathered $320 million inflows on Friday and suffered net outflows during the week.
After falling out of investors' favor and lagging behind bitcoin in price action and ETF flows this year, ether has enjoyed a resurgence recently as Donald Trump's election victory rejuvenated interest in altcoins and decentralized finance (DeFi) applications.
Along with strong ETF inflows, open interest for ETF futures on the institutional-focused Chicago Mercantile Exchange (CME) surged to all-time records of almost $3 billion, per CoinGlass, underscoring the improving sentiment towards the asset.
Read more: Think Ethereum’s ETH is Dead? Surging Metrics Show Otherwise
Noting the strong ETF inflows, crypto trader Edward Morra called ETH "the most obvious catch-up trade of this cycle," in a Saturday X post.
While bitcoin spent the week consolidating below $100,000, ETH also showed relative strength against the largest crypto. ETH's price hit a five-month high above $3,700 on Saturday and outperformed BTC on both a weekly and monthly basis, although it's still lagging year-on-year, CoinDesk Indices data shows.
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It's possible that the ETH-BTC ratio is forming a major bottom after trending down for about three years, Joel Kruger, market strategist at LMAX Group, said in a Friday note.
"We believe the improved outlook for the DeFi space — warmer regulatory climate with incoming US administration — is a main driver behind the shift in sentiment, as market participants can now see a clearer path towards investment in Ethereum," said Kruger.
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Solana CME Futures Fell Short of BTC and ETH Debuts, but There's a Catch
When adjusted for asset market capitalization SOL's relative futures volume looks better, K33 Research noted.
What to know:
- Solana's SOL futures began trading on the Chicago Mercantile Exchange (CME) on Monday, with a notional daily volume of $12.3 million and $7.8 million in open interest, significantly lower than the debuts of bitcoin (BTC) and ether (ETH) futures.
- Despite the seemingly lackluster debut, when adjusted to market value, SOL's first-day figures are more in line with BTC's and ETH's, according to K33 Research.
- Despite the bearish market conditions, the launch of CME SOL futures offers new ways for institutions to manage their exposure to the token, said Joshua Lim of FalconX.
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