Institutional Investors Buying Ethereum Dip
Institutional investors are taking advantage of lower prices to buy Ethereum. This is happening because spot Ethereum exchange-traded funds (ETFs) are seeing positive inflows again. However, this trend is not seen with Bitcoin funds.
Ethereum ETFs Experience Positive Inflows
Recently, Ethereum had a significant market crash, dropping 23% in just 24 hours. Despite this, U.S. spot Ethereum ETFs had positive fund inflows. On August 5, the nine new spot ETH ETFs collectively saw $49 million in inflows. This was the second-highest inflow day since they started. It was only the fourth day of inflows in the last ten trading days. This shows that institutional investors are buying the Ethereum dip.
Expert Confirmation
ETF specialist James Seyffart confirmed this trend in a post on X on August 6. He said, “ETF investors, in aggregate, likely bought the dip on Ethereum today.”
Leading Ethereum Funds
BlackRock’s ETHA fund led the inflows with $47.1 million, bringing its total to $760 million. VanEck’s ETHV fund followed with $16.6 million, and Fidelity’s FETH had $16.1 million in inflows. Bitwise’s ETHW fund saw $7.2 million, while Grayscale’s Ethereum Mini Trust received $7.6 million. However, the main Grayscale ETHE fund experienced an outflow of $46.8 million, the lowest since it became a spot ETF.
Bitcoin Funds Not Following Suit
In contrast, Bitcoin funds did not see the same dip buying activity. Data from Farside Investors showed an outflow of $168.4 million from Bitcoin funds on Monday. Fidelity, Ark 21Shares, and Grayscale all recorded outflows between $58 to $70 million. BlackRock and four other funds had zero flows. Grayscale’s Mini Bitcoin Trust had a minor inflow of $21.8 million, and Bitwise (BITB) and VanEck (HODL) each saw around $3 million.
Bitwise CIO Matt Hougan noted that while there was some dip buying for their funds, the primary focus was on Ethereum.
Ethereum Price Recovery
On August 5, Ethereum’s price dropped to its lowest in 2024, at $2,171. This 34% decrease in less than a week was the steepest and fastest since May 2022. However, during the Tuesday morning Asian trading session, Ethereum showed signs of recovery, reclaiming the $2,500 mark. For the uptrend to continue, Ethereum needs to break through the resistance at $2,900. This could be a slow process, especially if Bitcoin’s recovery remains sluggish.
Bitcoin ETFs See Record Trading Volume
Spot Bitcoin ETFs saw a record $5 billion trading volume recently, with minimal outflows of just 0.3% of total assets. Bitcoin bounced back to $55,000 after an 8.5% recovery in 24 hours. ETF investors have shown “diamond hands,” meaning they are holding on to their investments despite market fluctuations. ETFs like BlackRock’s IBIT registered zero outflows on August 5.
Major Altcoins See Larger Movements
Other major altcoins also saw significant movements. Solana (SOL) grew by 21.4% during this period. This recovery could be a natural market movement since Bitcoin faced the deepest correction of the current cycle, falling 29% in two weeks. A trader known as Rekt Capital highlighted this.
Bitcoin’s Price and Support Levels
The $49,000 price region has been respected as short-term support so far, according to Bitfinex analysts. However, Bitcoin could revisit this area if macroeconomic conditions worsen. On the upside, Bitcoin could rise to the range between $59,400 and $62,550. This is due to a new “CME gap” created after the August 4 crash. A CME gap is the difference between Bitcoin’s opening and closing prices at the Chicago Mercantile Exchange. These gaps are noticeable during weekends when traditional markets are closed, making the gaps between Friday closing prices and Monday opening prices more significant.
ETF Holders Show Strong Holding Behavior
On August 5, Bitcoin ETFs saw the largest daily trading volume since mid-April, surpassing $5 billion. Bloomberg senior ETF analyst Eric Balchunas noted that high trading volumes on bad days represent “a reliable measure of fear.” Despite the high trading volume, only $168 million left the spot Bitcoin ETFs on that day, which is just 0.3% of the total assets under management. Notably, BlackRock’s IBIT registered no outflows.
Balchunas was expecting “a couple of billions” in outflows but was surprised by the strong holding behavior of ETF investors. This indicates that institutional investors are still confident in Bitcoin’s long-term potential.
Conclusion
Institutional investors are actively buying Ethereum during its price dips, as shown by the positive inflows in spot Ethereum ETFs. In contrast, Bitcoin funds are experiencing outflows. Despite the recent market crash, Ethereum is showing signs of recovery. Bitcoin has also rebounded, with ETF investors holding on to their investments. As the market continues to evolve, it will be interesting to see how institutional investors react to future price movements and economic conditions.
