Fidelity’s Ethereum Fund Sees Record $25M Outflow Amid Investor Caution—Spot Ether ETFs Under Pressure

Over $25 million was withdrawn from Fidelity’s Ethereum Fund on October 1st, marking the largest single-day outflow since the fund’s inception.

This significant event highlights ongoing pressure in the U.S. spot Ethereum ETF market, which has struggled recently despite initial enthusiasm for these products.

U.S. Spot Ether ETFs Face Mounting Withdrawals

Fidelity’s Ethereum ETF isn’t alone in facing outflows. On the same day, a total of $48.6 million exited nine U.S.-based Ether ETFs. Bitwise’s Ethereum ETF (ETHW) saw $26.6 million in withdrawals, followed by Grayscale’s Ethereum Trust (ETHE), which lost $0.9 million.

📉 The #Ethereum Spot ETF is still seeing more outflows than inflows.

On October 1st, there was a net outflow of -$48.6M, with ETH price hovering at $2,601.

Despite initial hype, significant inflows remain elusive.

For now. pic.twitter.com/wScKkFuo1i

— Leon Waidmann | Onchain Insights🔍 (@LeonWaidmann) October 3, 2024

Despite the broad outflows, two ETFs managed to attract fresh capital. The Core Ethereum ETF (CETH) from 21Shares and the Ethereum ETF (ETHV) from VanEck gained $2.7 million and $1.2 million, respectively, indicating that interest in Ether ETFs remains, albeit cautiously.

Fidelity and BlackRock Lead the Market

Fidelity’s Ethereum Fund, with $453.5 million in assets, is the second-largest U.S. Ether ETF, trailing only BlackRock’s iShares Ethereum Trust (ETHA), which holds $1.14 billion. However, U.S. spot Ether ETFs have seen a net outflow of $572 million recently, raising concerns about the broader market outlook.

Bitcoin ETFs Also Under Pressure

Cautious sentiment isn’t limited to Ethereum. Spot Bitcoin ETFs recorded their largest daily withdrawals in nearly a month on October 1st, with $242.6 million exiting the funds. The largest outflow came from Fidelity’s Wise Origin Bitcoin Fund, losing $144.7 million, followed by the ARK 21Shares Bitcoin ETF, which saw an $84.3 million outflow. The recent decline in Bitcoin’s price—dropping over $4,000 amid Middle East tensions—contributed to the sell-off.

Uncertainty Clouds the Future of Crypto ETFs

Both Bitcoin and Ethereum ETF markets are facing increased skepticism from investors and regulators alike. Although some analysts remain optimistic about the long-term potential of these funds, the recent wave of withdrawals indicates growing investor caution.

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Outlook: Monitoring Investor Sentiment

The next few weeks will be critical for the crypto ETF market. Analysts and investors are keen to see if the outflow trend will continue or if market conditions will stabilize. For now, it’s clear that heightened geopolitical risks and regulatory uncertainties are impacting sentiment, making investors more cautious in their approach to crypto ETFs.