The recent 9% drop in Ethereum’s price, despite the highly anticipated launch of Ethereum ETFs, has sparked intense debate across the crypto community. Many investors expected a bullish surge following the approval and initial trading of spot Ethereum ETFs—similar to the momentum seen with Bitcoin ETFs. Instead, ETH has faced downward pressure, leaving traders and analysts searching for answers.
This article dives into the key factors behind Ethereum’s unexpected price action, explores expert insights, and examines whether this dip is a short-term setback or a sign of deeper market dynamics at play.
Ethereum ETF Launch: Strong Inflows, Weak Price Reaction
On the surface, the debut of spot Ethereum ETFs was a success. Day-one net inflows reached $110 million**, with total trading volume hitting **$1.1 billion. While impressive, this pales in comparison to Bitcoin ETFs, which saw $655 million** in net inflows and **$4.6 billion in volume on their first day.
Despite these inflows, Ethereum’s price dropped nearly 9% in the two days following the launch. This disconnect between strong institutional demand and weak price performance has puzzled many.
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Crypto analyst Michaël van de Poppe highlighted this anomaly, noting that such a muted price reaction is not unprecedented. He compared it to the early days of Bitcoin ETFs, where initial price action was sluggish before a significant rally unfolded weeks later.
Van de Poppe believes Ethereum is currently in a similar phase—undervalued and underappreciated despite growing institutional interest.
The Grayscale Effect: Outflows Offset ETF Inflows
One of the primary reasons for Ethereum’s price stagnation lies in the outflows from the Grayscale Ethereum Trust (ETHE). As investors shift from ETHE to more liquid spot ETFs, large volumes of ETH have been sold or redeemed, creating downward pressure on the market.
This mirrors what happened with the Grayscale Bitcoin Trust (GBTC) after Bitcoin ETFs launched. Massive outflows from GBTC initially weighed on BTC’s price—even as new ETFs attracted inflows. Over time, however, the market absorbed these flows, leading to a sustained rally.
Van de Poppe expects a similar trajectory for Ethereum. He predicts that once the transition from ETHE to ETFs stabilizes, Ethereum could rally from its current levels around $3,500** to **$7,000–$7,500 within the next one to two weeks.
On-Chain Data Suggests Strong Holder Confidence
While price action may seem bearish, on-chain metrics paint a more optimistic picture of Ethereum’s health:
- Large transaction volume increased by 24% in 24 hours.
- Daily active addresses rose by 2.3%, indicating growing network usage.
- Exchange netflows dropped by 78.7%, suggesting investors are moving ETH off exchanges—often a sign of long-term holding.
- Approximately 72% of Ethereum holders are currently in profit, according to IntoTheBlock data.
These signals point to strong underlying demand and “diamond hand” behavior among long-term investors.
One notable example comes from Lookonchain data, which revealed a savvy trader who bought 96,639 ETH (worth $151.42 million) from Coinbase between September 3 and 7, 2022, at an average price of **$1,567. Starting in March of this year, the investor began depositing 40,000 ETH onto Kraken—locking in profits—while still holding 56,639 ETH (now worth $193.7 million). With a total realized profit of **$178.6 million, this whale recently deposited another 10,000 ETH, likely to take further profits.
This kind of strategic movement reflects confidence in Ethereum’s long-term value—even amid short-term volatility.
Why Ethereum’s ETF Impact Could Be Bigger Than Bitcoin’s
Despite lower initial inflows, many experts believe Ethereum’s ETF could have a greater long-term impact than Bitcoin’s. Here’s why:
1. Lower Issuance Volume
Ethereum ETFs launched with fewer shares available compared to Bitcoin ETFs. This scarcity could amplify price movements once demand picks up.
2. Broader Ecosystem Utility
Unlike Bitcoin, Ethereum powers decentralized applications (dApps), smart contracts, and DeFi protocols. As institutional money flows in, it may not just lift ETH’s price—it could accelerate innovation and adoption across the entire ecosystem.
3. Undervaluation Relative to Fundamentals
Van de Poppe argues that the Ethereum ecosystem remains massively undervalued, especially after a prolonged 2.5-year bear market for altcoins. With renewed institutional access via ETFs, Ethereum and its related tokens could be poised for a major revaluation.
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What’s Next for Ethereum?
The road ahead for Ethereum hinges on several factors:
- The pace at which ETHE outflows stabilize.
- Continued inflows into spot ETFs from pension funds, asset managers, and retail investors.
- Broader macroeconomic conditions, including interest rates and risk appetite.
- Upcoming upgrades to Ethereum’s network that improve scalability and reduce fees.
Market sentiment will likely remain volatile in the short term. However, the structural shift brought by ETF approval—granting mainstream investors easy exposure to ETH—cannot be ignored.
Events like Benzinga’s Future of Digital Assets conference will further explore Ethereum’s role as an institutional asset class, bringing together thought leaders to assess its long-term potential.
Frequently Asked Questions (FAQ)
Q: Why did Ethereum drop after ETF approval?
A: Despite strong ETF inflows, Ethereum’s price fell due to significant outflows from the Grayscale Ethereum Trust (ETHE), which created selling pressure. This mirrors Bitcoin’s post-ETF launch pattern and is likely temporary.
Q: Are Ethereum ETFs performing well?
A: Yes—day-one net inflows reached $110 million with $1.1 billion in trading volume. While below Bitcoin ETF levels, this indicates solid institutional interest and a strong foundation for future growth.
Q: Is now a good time to buy Ethereum?
A: Many analysts believe so. With 72% of holders already in profit and strong on-chain metrics, Ethereum may be consolidating before a larger move upward—especially as ETHE outflows slow.
Q: How high could Ethereum go after the ETF launch?
A: Predictions vary, but some experts like Michaël van de Poppe forecast a rise to $7,000–$7,500 within weeks once market dynamics stabilize and institutional demand fully kicks in.
Q: What does the ETHE outflow mean for investors?
A: ETHE outflows represent investors moving from a less efficient trust structure to more liquid spot ETFs. While this creates short-term selling pressure, it ultimately strengthens the market by aligning with more transparent and tradable products.
Q: Could Ethereum outperform Bitcoin in the next bull run?
A: It’s possible. Ethereum’s utility in DeFi, NFTs, and smart contracts gives it broader use cases than Bitcoin. With ETF access now available, institutional capital may increasingly favor ETH for its ecosystem potential.
Final Thoughts
Ethereum’s 9% drop post-ETF launch is not a failure—it’s a transitional phase. The market is digesting structural shifts, including Grayscale outflows and institutional realignment. Behind the scenes, on-chain activity and whale behavior suggest strong conviction in ETH’s future.
With its ecosystem undervalued and institutional adoption accelerating, Ethereum may be setting up for one of its most powerful rallies yet.
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