Ethereum: From strong demand to a 23-week outflow, how ETH ETF sentiment collapsed

The Ethereum ETF has experienced over 23 consecutive weeks of outflow, suggesting institutional investors are losing interest in holding Ethereum [ETH] in their portfolios. Notably, institutional demand was strong through August and September.

However, demand plummeted in October.

Withdrawals from institutional clients totaled over $1 billion by the 30th of October. Of those withdrawals, $155.8 million were withdrawn in the last session. Interestingly, a large portion of those withdrawals, $76.6 million, came from BlackRock’s ETHA alone.

It’s worth noting that the persistent selling has correlated with ETH dropping from almost $2,700 in late September to approximately $2,300. Additionally, continued withdrawals may limit the ability for institutional client demand to provide support for price increases.

Furthermore, it appears investors have turned to alternative investments or reduced overall cryptocurrency exposure. Without an increase in institutional inflows, it is likely that ETH will continue to be at risk of further declines unless Spot buyers can absorb the selling pressure.

Ethereum reorg disrupts THORChain swaps

Meanwhile, activity within Ethereum’s blockchain presents risks to protocols that rely on transaction confirmations. Transactions are typically included in a block and receive confirmation as additional blocks are built upon them.

Temporary discrepancies between competing blocks can create a chain reorganization that replaces a previously confirmed block with a new version.

On the 31st of October, this occurred on Ethereum when a block that contained a 10 ETH deposit associated with a THORChain swap was replaced.

Although the deposit had already been reflected in the THORChain’s ledger and a refund had been made for the failed swap after the failure of the deposit, the removal of the deposit created a double refund.

As a result, THORChain’s vault became short 10 ETH, and an emergency halt was placed across all 12 supported chains. This resulted in delays to cross-chain transactions and included delays for transactions of funds stolen from Binance.

Together, Ethereum faces pressure from weakening investment demand and growing concerns around cross-chain reliability. With Spot buying yet to provide a meaningful offset, institutional demand offers little support for an ETH recovery.

For Ethereum to experience a sustainable price increase, it will require more than just a price recovery. In order for the price of ETH to stabilize, renewed investment demand in ETH based ETFs must occur.

Still, this should be along with improved transaction security measures to instill confidence in Ethereum-based activities.

Final Summary

• Ethereum ETFs saw over $1 billion in October outflows, extending the withdrawal streak to 23 sessions.

• ETH’s reorganization caused a 10 ETH double refund on THORChain, disrupting swaps across 12 chains.