Ethereum (ETH) is noticing the first movements in its ETF. Watching whales on ETF transfers, especially to Coinbase wallets, may give signs of demand.
Recently, a significant ETH transfer originated from Cumberland, a company offering deep crypto liquidity. During the launch of the first Ethereum ETF, Cumberland claimed its position as partner to some of the biggest issuers. Soon after that, Cumberland moved more than 10K ETH in liquidity, of which 8,481 ETH went to Coinbase’s wallets. Cumberland is an important source of regulated crypto liquidity, as it has been granted a BitLicense and is capable of operating in the state of New York.
This leaves Cumberland with 8.14K ETH in its reserves, in addition to 1,354 BTC. So far, Ethereum ETFs are still not showing significant demand for coins, but a return to net demand could easily absorb a big part of Cumberland’s holdings.
Part of the Cumberland holdings ended up in Fidelity’s custodial wallet. Together with Coinbase, Cumberland helped build a deposit of 12,000 ETH. With the latest coin moves, Fidelity Custody holds 209K ETH and may turn into an important player in providing actual tokens for spot trading.
Within 1 hour, #Cumberland deposited totally 10,759 $ETH (~$36.31M)
To #Coinbase: 8,481 $ETH (~$28.63M)
To #Gemini: 1,523 $ETH (~$5.14M)
To #FalconX: 755 $ETH (~$2.54M)Address:https://t.co/p7PClw3TWp pic.twitter.com/maQ4nTeNXn
— The Data Nerd (@OnchainDataNerd) July 29, 2024
Grayscale outflows slowing down
The Ethereum ETF is still waiting for a trend reversal, as most outflows still come from the ETHE fund by Grayscale. Net ETF outflows shrank to 92.9M, with the biggest direct outflows coming from ETHE.
However, the Grayscale fund selling is slowing down. ETHE shares are also trading up at $28, the equivalent of $2,800 ETH, and still have some catching up to do. Recently, ETHE traded at a low of $26.
ETHE outflows have already slowed down to around $210M daily, and the selling may further slow down in the next two weeks. The market still awaits the ETF to post net daily inflows. Currently, Grayscale is also seen as a provider of ETH liquidity to other funds.
In the past weeks, Grayscale cut down its ETH holdings from 3M ETH down to 2.5M on rapid selling. So far, the market has absorbed the inflows while the ETH price recovered. Grayscale’s holdings peaked in 2021, when it held 3.2M ETH, but divested 200M gradually in the past three years.
$ETH ETF flows starting to look pretty decent
+ Latest net outflow of $97.9m ( $ETHA inflow of $58.6m not updated in table)
+ $ETHE outflows starting to taper off with a net outflow of $210m
+ Total outflow of 19.8% from the starting AUM of $9.2b
+ Current Asset holding of… pic.twitter.com/MSAUo7fjAW— Defi_Maestro ✺ (@Defi_Maestro) July 30, 2024
ETH tokens may see increasing demand
The reshuffling of ETH holdings happens at a time when about 40% of available ETH has been locked in some form. Around 28% of the supply is staked, and another 12% is locked for the long term in various bridges or smart contracts. ETFs, just like the Bitcoin (BTC) products, will need free, unlocked coins to create a reserve for new shares.
The recent launch of ETF products is also reawakening older wallets. Despite the lack of immediate price rallies, coins are becoming valuable for multiple tasks on the market.
In the past week, another old ETH wallet reawakened, moving coins not touched since the early pre-mine days of Ethereum. The wallet contains 2,000 ETH, not moved for the past nine years. ETH is also used to park earnings from meme tokens and realize profits into a more secure asset.
Ethereum ETFs had a successful week
Ethereum ETFs had their first week in trading, and the Bitwise product tallied up its first successes. The fund saw $265M in inflows and trading volumes of $200M in a week. The Bitwise fund is still in its zero-fee stage, available for six months, or until expanding to $500M.
BlackRock’s ETHA fund achieved $442M in total inflows since the launch, becoming the best-traded fund. BlackRock expects the ETF will start receiving allocations from traditional finance, which would become the chief inflow of the funds. The current behavior of ETF bidding is compared to that of BTC, which had a slow start, but then led to a 80% price rally.
The behavior of the ETFs will depend on outsider investors, while spot and derivative ETH trading may move on different logic. ETH consolidated at $3,350.34, stopping its recent slide as low as $3,000. ETH futures markets also do not have peak open interest compared to BTC.
Cryptopolitan reporting by Hristina Vasileva
