TL;DR
- Ethereum exchange-traded funds saw nearly $200 million in outflows on Monday, their second-largest daily exit since inception.
- Despite the sharp reversal, the withdrawal follows an unprecedented streak of $3.7 billion in inflows across eight sessions, showing institutional appetite remains strong.
- Rising unstaking activity has intensified market volatility, yet analysts emphasize that Ether ETFs are still gaining ground against Bitcoin ETFs in terms of adoption and capital rotation.
Ethereum ETFs faced $196.7 million in outflows at the start of the week, only surpassed by the $465 million recorded on August 4. The latest exit added to Friday’s $59 million in withdrawals, pushing the two-day figure beyond $250 million. Still, these numbers are relatively small when weighed against the massive inflows of the prior week, where single-day entries topped $1 billion.
Data shows BlackRock’s iShares Ethereum Trust (ETHA) and Fidelity’s Ethereum Fund were the most affected. ETHA recorded $87 million in redemptions on Monday while Fidelity lost $79 million. On Friday alone, Fidelity shed $272 million, making it the single largest contributor to that day’s downturn. Even with the outflows, BlackRock remains one of the largest institutional holders of Ether, managing over 3.6 million ETH valued at approximately $15.6 billion.
Market analysts argue that such liquidations are often cyclical, reflecting profit-taking rather than a fundamental shift in sentiment. Long-term positioning by asset managers indicates that institutional strategies around ETH remain intact.
Unstaking Surge Adds More Pressure
The new downturn comes as Ethereum’s validator exit queue surged to an all-time high of more than 910,000 ETH awaiting withdrawal, valued at nearly $4 billion. The backlog now stretches beyond 15 days, signaling a growing appetite among validators to liquidate staked holdings. Although some skeptics warn of downward pressure on price, others argue that such rotations reflect market maturity and healthy liquidity dynamics.
Ethereum has fallen roughly 6.5% over the past week, yet its resilience compared with Bitcoin highlights an evolving investor preference. Data from Dragonfly’s analysts shows ETH ETFs are steadily closing the gap with Bitcoin ETFs in terms of percentage of circulating supply locked in funds. If current momentum persists, Ether ETFs could surpass Bitcoin ETFs by September in relative supply representation.
While short-term volatility may rattle markets, long-term flows continue to support the thesis that Ethereum’s unique staking economy, combined with institutional-grade products, positions ETH as a key asset for diversified digital portfolios. The pullback might even strengthen future demand by offering entry points for new investors who were previously sidelined by overheated valuations.
