Ethereum ETFs Inflows Surge Amid Crypto Market Turbulence
December was a historic month for U.S. Ethereum (ETH) spot exchange-traded funds (ETFs), with net inflows reaching $2.1 billion.
This milestone makes it the Ethereum ETF’s best month since its launch in July 2024.
Ethereum ETF hits new monthly high in December
BlackRock’s Ethereum ETF (ETHA) led the way in December, recording $1.432 billion in inflows, according to SoSoValue. Fidelity’s Ethereum ETF (FETH) followed with $752 million, while VanEck’s ETHV ranked third with $12 million in net inflows in December. Bitwise managed up to $10 million in positive net flows, while Grayscale recorded $93 million in negative net flows.
On December 31, the Grayscale Ethereum Trust ETF (ETHE) continued to struggle, with a single-day outflow of US$5.6 million, and an overall net outflow of US$3.64 billion. Cryptocurrency researcher Trader T ConfirmIn December, Grayscale’s ETHE saw monthly outflows of $274 million.
Although the Ethereum ETF has reached the $2.1 billion milestone, it still lags behind the Bitcoin ETF. BlackRock’s Bitcoin Spot ETF (IBIT) leads the market with a staggering $37 billion in net inflows in 2024, significantly ahead of Fidelity’s Bitcoin ETF (FBTC)’s $12 billion. By comparison, BlackRock’s Ethereum ETF (ETHA) saw cumulative inflows of $3.5 billion in 2024, followed by Fidelity’s $1.5 billion.
While December’s record-breaking performance provided a much-needed boost, 2024 is shaping up to be a challenging year for Ethereum overall. Ethereum has struggled to maintain its dominance, according to a report from 10X Research Competing blockchains like Solana And Tron has gained traction. For these reasons, 10X Research expresses doubts about Ethereum’s prospects in 2025.
“The lack of significant catalysts and the risk of validator unstaking pose significant challenges. Unless Ethereum can innovate and regain user interest, its underperformance relative to Bitcoin is likely to continue.” read.
Ethereum’s woes in 2024 are evident in its market performance: Bitcoin surged 120% last year, while Ethereum rose only 48%. The 70% underperformance relative to Bitcoin raises questions about Ethereum’s value proposition and its ongoing validity. upgrade.
Ethereum’s Staking concerns and usage stagnation
According to one of Ethereum’s main selling points, 10X, pledgewas also criticized. With 28% of ETH being staked, many believe that Ethereum has transformed into a passive income tool rather than an actively utilized blockchain. Decentralized Finance and other activities. Currently, the staking yield is about 3%, which is less attractive than traditional finance (TradFi) interest rates.
The Ethereum network has also been struggling to return to its peak activity levels. Weekly transaction volume peaked at 11 million transactions in May 2021 and is currently stable at around 9 million transactions. Likewise, weekly active addresses remain between 300,000 and 400,000.
“Ethereum’s stagnation stands in stark contrast to the growth of alternative blockchains. The chain’s decline in user activity and its inability to catalyze innovation points to deeper systemic issues,” 10X Research added.
Other pressing issues include validator trends. The 1-month growth rate of active validators has turned negative, raising concerns that some validators may exit the network. If this trend accelerates, it could put additional downward pressure on ETH prices.
Adding to the uncertainty is the actual price of Ethereum – the average price of Ethereum as a whole Ethereum supply Last moved on-chain – current price is $2,093. This is lower than the average deposit price of staked ETH of $2,383, suggesting that validators may face losses if the price continues to fall.
Despite the challenges, December’s inflows underscore Ethereum’s enduring appeal to institutional investors. as Ethereum ETF As the market matures, Ethereum could benefit from wider adoption and improved liquidity.
BeInCrypto data shows that ETH is down 0.37% since the opening of trading on Wednesday. As of this writing, the price of Ethereum is $3,333.
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