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Institutions are losing faith in Ethereum

Photo of: Joseph Stone
by Joseph Stone

Capital outflows from Ethereum investment products reach a record $50 million. The ETH price is nevertheless holding up (+4.11%).

On June 25, a record amount of Ethereum options expired. The previous event of this type resulted in a 17% drop in the ETH price. Did this well-known event influence investors?

Opinions are divided. The fact remains that last week was characterized by a negative flow of capital into Ether investment products. The outflow even reached an all-time high according to the weekly CoinShares report.

This is now the third consecutive week of decline for Ethereum. But more importantly, this drop is getting bigger. Last week, the amount of capital outflows amounted to $50 million.

In total, over three weeks, since June 6, this value is therefore close to $ 64.3 million. For all that, over the whole year 2021, the balance sheet remains largely positive with $943 million committed to Ether products.

The reason for this sudden disaffection of institutional investors? The crisis of crypto securities since May. And this crisis is far from being limited to the two main assets which are ETH and BTC.

According to CoinShares, the last week is characterized by an outflow of crypto investment products of $44 million. This is now the 4th consecutive week of decline in this indicator. Moreover, since mid-May, the decline amounts to $313 million.

And so it is the Ether that is contributing the most in the last 7 days to this decline. On the other hand, the situation seems to be stabilizing for Bitcoin. The outflow of BTC products was last week at $1.3 million.

This is well below the $89 million of the previous week. On the other hand, some BTC products are showing positive balances, such as Grayscale’s Bitcoin Trust. This reflects a mixed feeling among investors about the future of the Bitcoin price.

Moreover, institutions may be changing their strategy, opting instead for more diversity in their crypto portfolios. Investments in multi-asset products are holding up. One way to reduce risk in the face of stock volatility.

“Multi-digital asset investment products continued to buck the negative trend with inflows of US$6 million last week, suggesting that investors continue to favor digital assets but are eager to diversify,” CoinShares observes.