Ethereum ETF saw nearly $800 million in outflows in a single week, setting a new historical high! ETH unexpectedly rebounded above $4,000.

Ethereum Spot ETF experienced the largest capital outflow since its inception last week, with as much as $795.6 million withdrawn, while Bitcoin ETF also lost over $900 million during the same period. However, despite the massive withdrawals by institutional investors, the price of Ethereum unexpectedly rebounded above $4,000 on Saturday, sparking widespread discussion in the market about this unusual phenomenon. This article delves into the market logic behind this paradoxical situation and future trends.

Ethereum ETF experiences historic capital outflow

According to the latest data from SoSoValue, in the week ending September 26, the U.S. spot Ether ETF experienced the most severe capital outflow since its launch in July 2024, with a total outflow amounting to an astonishing $795.6 million, while the trading volume exceeded $10 billion.

This figure is slightly higher than the worst-performing week prior— the week ending September 5, when the capital outflow was $787.7 million. Two consecutive months of large-scale capital outflows have raised questions in the market about the long-term appeal of the Ethereum ETF.

The main ETF products perform differently

Among various ETF products, the performance differences are significant:

· BlackRock ETHA: As a market leader, it has seen outflows of over $200 million, but assets under management (AUM) still remain above $15.2 billion.

· Fidelity FETH: The outflow is the most severe, reaching 362 million USD, far exceeding the market share of the leading BlackRock product.

It is particularly noteworthy that, with the price of Ethereum dropping below the $4,000 mark on Thursday and Friday, the Spot ETF has seen daily outflows of approximately $250 million, marking the worst two days of outflows since mid-August.

Bitcoin ETF also suffered a heavy blow

(Source: The Block)

Ethereum ETF is not the only cryptocurrency ETF product that has been hit. Data from SoSoValue shows that the spot Bitcoin ETF also experienced a capital outflow of up to $902.5 million last week, and the situation is equally grim.

On September 26, the total outflow of funds from Bitcoin ETFs reached $418.3 million, marking the highest single-day outflow since mid-August. Similar to Ethereum ETFs, BlackRock's IBIT fund performed relatively well, with only $37.3 million flowing out on Friday, while Fidelity's FBTC saw outflows of up to $300.4 million.

This difference further solidifies BlackRock's dominant position in the crypto ETF market. Data from The Block shows that over time, BlackRock's market share has been steadily increasing, sometimes exceeding 80% in the Bitcoin ETF market.

Contradictory phenomenon: ETF funds outflow, ETH price rebounds

What confuses the market the most is that despite the massive outflow of ETF funds, the price of Ethereum rebounded on Saturday, reclaiming the $4,000 mark. According to data from The Block, ETH is currently trading at around $4,020.

This contradictory phenomenon has sparked widespread discussion in the market, and analysts have proposed several possible explanations:

1. Impact of the Over-the-Counter (OTC) Market

One theory suggests that institutional investors may be shifting from ETF products to directly purchasing Ethereum in the over-the-counter market. This shift could be to avoid ETF management fees or to gain greater trading flexibility.

"Large institutional investors typically seek the most cost-effective ways to establish cryptocurrency positions," said a cryptocurrency analyst who wished to remain anonymous. "Once they accumulate enough experience and infrastructure, buying directly in the over-the-counter market may be more attractive than going through an ETF."

2. Discrepancies Between Retail Investors and Institutional Investors

Another possibility is that retail and institutional investors have differing views on Ethereum. Institutions may be reducing their exposure through ETFs, while retail investors may be purchasing ETH directly on exchanges, driving the price up.

"We may be witnessing a divergence between institutional investors and the retail market," cryptocurrency analyst Rachael Lucas told The Block, "institutions may be cautious about short-term macroeconomic risks, while retail investors may be more focused on the long-term technological development of Ethereum."

3. Technical Rebound and Oversold Correction

From a technical analysis perspective, Ethereum may have entered the oversold zone after breaking below $4,000, triggering a natural technical rebound.

"The drop of Ethereum below $4,000 was triggered by technical failures, macroeconomic fluctuations, and chain liquidations," Lucas explained, "when the price reaches a key support level, a technical rebound usually occurs."

Market Structure Changes: The Impact of BlackRock's Dominance

It is worth noting that BlackRock's dominance in the cryptocurrency ETF market is changing market dynamics. Compared to its competitors, BlackRock's products have shown greater resilience under pressure of capital outflows.

However, a strange phenomenon is that although BlackRock dominates the Bitcoin and Ether ETF market, the company has not applied for a Solana ETF Spot like many competitors. This strategic choice has raised market speculation about BlackRock's long-term crypto strategy.

"BlackRock seems to be taking a more cautious approach, focusing on established mainstream crypto assets," a market observer commented, "which may reflect their assessment of the regulatory environment or the long-term prospects of emerging assets like Solana."

Future Outlook: ETF Fund Flows and Ethereum Prices

Looking ahead, the market will closely monitor whether the capital flow of the Ethereum ETF will continue to worsen and whether this will ultimately affect the price performance of ETH.

· Short-term factors

In the short term, the following factors may affect the performance of Ethereum:

Federal Reserve Policy: The upcoming Federal Reserve decision may have a significant impact on risk assets.

Institutional Participation: Will institutional investors re-enter the ETF market or continue to divest?

Technical Development: The technological updates of the Ethereum network and the development of the application ecosystem.

Regulatory Environment: The Evolution of Global Cryptocurrency Regulatory Frameworks

· Long-term outlook

In the long term, the fundamentals of Ethereum remain strong. Network activity remains active, and the developer ecosystem continues to expand. These factors may support ETH's long-term value proposition, regardless of short-term ETF fund flows.

"ETF fund flows provide valuable information about institutional sentiment, but they are not always accurate leading indicators of price trends," noted a senior market analyst, "The long-term value of Ethereum will be determined by its adoption and practicality as a global smart contract platform."

Conclusion: Market Divergence Creates Opportunities

The contradiction between the record outflow of funds from the Ethereum ETF and the rebound in ETH prices highlights the complexity and divergence of the current cryptocurrency market. This divergence may create opportunities for astute investors, but it also requires more cautious risk management.

For investors, it is important to look beyond short-term market noise and focus on fundamental factors and long-term trends. Ethereum's position as the leading platform for decentralized applications and its core role in the DeFi, NFT, and Web3 ecosystems may ultimately be more important than short-term ETF capital flows.

As the market continues to digest these contradictory signals, the price trend in the coming weeks will provide more clues, revealing whether this is a temporary technical Rebound or the beginning of a more sustained recovery.