Ethereum ETF Hot Steak Continues Amid Trump Regulatory Optimism

Ethereum spot ETFs, or exchange-traded funds, saw a net inflow of $151 million on Tuesday, continuing an uninterrupted net positive capital flow streak that began on November 22.

According to crypto market research company BRN, Ethereum ETFs added $151 million on Tuesday, while Bitcoin ETFs collectively added $494 million. Bitcoin ETFs have been hot for most of the year following their January launch in the United States, while Ethereum ETFs saw modest demand out of the gate.

BRN analyst Valentin Fournier recently wrote in a note to investors that Ethereum ETFs are enjoying the benefits of a broader climate that is driving capital to crypto ETFs in general. Bitcoin ETFs are on a 14-day positive streak, he noted, while Ethereum ETFs have collectively gone green for even longer at 16 days.

Jake Ostrovskis, Wintermute’s OTC trading desk principal, told Decrypt that the inflows are “explained by analysts speculating that a Trump administration might pave the way for staking in Ethereum ETFs,” potentially driving demand as a result.

“This will be worth watching into 2025,” he concluded.

Obchakevich Research founder Alex Obchakevich told Decrypt that Ethereum ETFs are “providing institutional investors with a convenient and regulated way to invest in crypto.” Such accessibility, he explained, “leads to an inflow of capital to the crypto market.”

Looking further into the future, Obchakevich said that he expects the success of crypto ETFs to “depend on regulation, investor confidence, and market adaptation to new financial instruments.”

Development in those areas “will take a long time and more than one year,” Obchakevich added, so “investors need to learn patience to accept all the changes that are currently taking place in the market.”

Oren De Lange, co-founder and CEO of decentralized exchange Lynx Finance, told Decrypt that “the story of Grayscale’s Ethereum Trust (ETHE) is perhaps the most fascinating aspect of Ethereum ETFs.” He explained it went from being the first instrument giving institutions exposure to Ethereum to being the only one that could afford to charge a 2.5% fee.

The lack of redemption options led to it trading at a significant discount compared to the net asset value, “effectively trapping investors.” When redemptions were enabled after the transition to an ETF, “expectations were high that billions of dollars in outflows would generate immense sell pressure on ETH.

This, De Lange believes, “contributed to ETH’s relative weakness compared to BTC in recent months.” Now the market is giving signs of stabilization, including positive Ethereum ETF flows, which “suggest that this prolonged selling wall may be fading.”

“If this marks the end of this major selling wall, I expect ETH to make a strong price move in the coming months,” De Lange concluded.

Crypto prices cool

BRN’s report also notes that despite strong inflows for Bitcoin and Ethereum ETFs, both underlying assets saw a significant drawdown over the past day. Both assets are down approximately 3% over the past 24 hours, per data from CoinGecko, with BTC priced at $103,485 and ETH at $3,835 as of this writing.

Fournier also highlighted a “notable” change in market dynamics, with about 500,000 BTC—worth nearly $52 billion as of this writing—having moved from long-term holders to whales over the past three months.

"This shift, alongside growing altcoin outperformance, suggests investors are diversifying to seek higher returns in recently outperforming altcoins,” the note concludes.

The Federal Reserve is expected to reduce rates by 25 basis points to between 4.25% and 4.50% at Wednesday’s Federal Open Market Committee meeting—the last one this year. Still, Fournier points out that the decision to issue a rate cut or not may be impacted by expected data from Friday’s Core Personal Consumption Expenditures Price Index report.

The PCE report is expected to remain at 3.3% year-over-year, but “any surprise showing rising inflation could unsettle markets, especially as Bitcoin currently faces bear pressure and lacks upward momentum.” Still, BRE believes that “the broader picture remains bullish.”

According to Fournier, factors likely to drive the price higher include more companies and states aligning with Bitcoin reserve strategies. These are “more companies and states,” and “for now, maintaining heavy exposure to both Bitcoin and Ethereum is our recommended strategy.”

Edited by Andrew Hayward