August Decline for Bitcoin ETFs
In August, U.S. spot Bitcoin exchange-traded funds (ETFs) experienced a notable net outflow of approximately $94 million. This downturn occurred despite a promising start to the month, which included an eight-day streak of positive inflows.
Peak Performance and Subsequent Losses
Data from SoSoValue indicates that spot Bitcoin ETFs had their most successful day on August 23, generating over $250 million in inflows. However, this positive trend could not offset the significant loss of $237 million on August 2, marking it as the worst day for these funds in that month.
Impact of Falling Bitcoin Prices
As Bitcoin’s price dropped from earlier highs, the net assets held by all commercially available Bitcoin funds fell by $4.24 billion, resulting in a total of approximately $53.8 billion by the end of August. The latter part of the month saw a shift in momentum, leading to net outflows surpassing any inflows.
BlackRock’s IBIT Experiences Outflows
BlackRock’s IBIT fund, a prominent player in the industry, recorded its first outflows since May, further contributing to the negative monthly trend. On the final trading day of August, both IBIT and several other funds reported no net inflows, while four funds logged outflows. Notably, Grayscale’s GBTC faced the largest outflow that day, with $70 million leaving the fund, bringing its year-to-date cumulative outflows close to $20 billion.
Significant Outflows from Other Funds
Other notable outflows included $65 million from ARK and 21Shares’ ARKB, $16 million from Bitwise’s BITB, nearly $13 million from Fidelity’s FBTC, and $11 million from Invesco’s BTCO. This trend highlights the significant pressure faced by Bitcoin ETFs as the month concluded.
Challenges for Ether ETFs
Spot Ether ETFs also encountered difficulties. On the last trading day of August, they reported no significant inflows or outflows, marking the first occasion in 30 trading days since their launch that both figures stood at zero. Despite achieving over $1 billion in trading volume during their early days in July, spot ether ETFs have seen a marked decrease in activity since then.
Cumulative Outflows for Ether ETFs
According to SoSoValue, spot ether ETFs have experienced a total cumulative net outflow of $477.25 million, and by the end of August, they held nearly $7 billion in assets, with Grayscale’s ETHE and ETH funds comprising $5.4 billion of that total. The third-largest fund, BlackRock’s ETHA, also faced a weekly outflow of $12.6 million across all spot ether ETFs.
Subpar Performance of Ether ETFs
Research from JPMorgan released on Wednesday revealed that ether spot ETFs have struggled with net outflows since their U.S. launch compared to their Bitcoin counterparts. Ether ETFs began trading on July 23, approximately six months after the launch of Bitcoin funds. In the first five weeks following their launches, Ether ETFs faced around $500 million in net outflows, while Bitcoin ETFs enjoyed inflows exceeding $5 billion.
Factors Contributing to Ether ETFs’ Struggles
JPMorgan’s analysts attributed the lackluster performance of ether ETFs to Bitcoin’s “first mover advantage,” a lack of staking options, and lower liquidity, making ether ETFs less appealing to institutional investors. Additionally, Grayscale’s Ethereum Trust (ETHE) unexpectedly faced outflows of $2.5 billion, surpassing JPMorgan’s forecast of approximately $1 billion during the transition from a closed-end fund to a spot ETF.
Grayscale’s Response to Outflows
In an attempt to mitigate the outflows from ETHE, Grayscale launched a mini ether ETF, but this initiative only successfully attracted $200 million in inflows. This response illustrates the ongoing challenges faced by ether ETFs in the current market environment.