Grayscale’s ETHE ETF Stops Bleeding After $2.3 Billion in Ether Outflows Since Launch

TLDR

• Grayscale Ethereum Trust (ETHE) posted its first day of zero outflows since conversion to spot ETF
• Ethereum and layer-2 networks saw increased activity recently
• ETH ETFs saw $5.0 million inflow, while Bitcoin ETFs had $27.8 million inflow on August 12
• Overall, Ethereum ETFs have $401.4 million in total outflows since launch
• Digital asset investment products saw $176 million in inflows amid market correction

The Grayscale Ethereum Trust (ETHE) has posted its first day of zero outflows since its conversion to a spot exchange-traded fund (ETF). This development comes as Ethereum and its layer-2 networks experience a surge in activity.

ETHE, which has seen nearly $2.3 billion in Ether outflows since its launch on July 23, 2024, finally halted its consecutive streak of daily outflows on August 12. This represents more than 25% of its total holdings, which stood at $9 billion before the conversion.

On the same day, United States-based spot Ether ETF flows turned positive for the fifth time since their launch. Data from Farside shows that Ethereum ETFs saw a slight inflow of $5.0 million. However, the total outflows from Ethereum ETFs since inception remain at $401.4 million.

In comparison, Bitcoin ETFs saw larger inflows on August 12, totaling $27.8 million. ARK’s ARKB led with a $35.4 million inflow, bringing its total inflows to $2.5 billion. BlackRock’s IBIT followed with a $13.4 million inflow. Some funds did see outflows, with Bitwise’s BITB and Grayscale’s GBTC experiencing $17.1 million and $11.8 million in outflows, respectively.

The stabilization of ETHE outflows coincides with increased activity on the Ethereum network and its layer-2 solutions. Trading volumes on Ethereum-based decentralized exchanges (DEXs) rose by 12% in a 24-hour period, while Solana-based DEXs saw a 10% decline in the same timeframe.

Layer-2 networks on Ethereum have also seen heightened activity. Uniswap, an Ethereum-based DEX, reported a record 8.65 million new addresses created across layer-2 networks in July, nearly double the 4.93 million added in June. Base and Arbitrum, two prominent layer-2 networks, boasted 2.64 million and 1.37 million weekly active users, respectively.

The total value locked (TVL) across all Ethereum layer-2 networks now stands at $37.7 billion, while Ethereum’s mainnet has $85 billion in TVL. On August 12, Ethereum layer-2 networks collectively processed 298 transactions per second, approaching the all-time high of 322 TPS reached on July 18.

In the broader context of digital asset investment products, a recent report indicates inflows of approximately $176 million as investors took advantage of the previous week’s market correction. The total Assets under Management (AuM) of investment products initially dropped to $75 billion during the correction but has since recovered to $85 billion.

Country-specific data shows varied investor sentiment. The United States saw the largest inflow of $89 million, followed by Switzerland with $20 million, Brazil with $19.9 million, and Canada with $12.6 million. However, the US also experienced the highest net outflows at around $306 million.

Grayscale, a significant institutional investor, now holds about 2.25 million ETH in total, including approximately 360,000 ETH in its newly launched Grayscale Ethereum Mini Trust (ETH).

This represents a 25% reduction in Ethereum holdings for Grayscale.