In a notable shift in investor sentiment, Ethereum (ETH) exchange-traded products (ETPs) have emerged as the preferred choice for institutional investors, overshadowing Bitcoin (BTC) amid a recovery in the cryptocurrency market. According to the latest Digital Asset Fund Flows report from CoinShares, published on August 12, crypto asset investment products experienced inflows totaling $176 million for the week ending August 11, signaling a rebound following a significant market slump on August 5.
Ethereum Leads with Substantial Inflows
Ethereum funds were the standout performers during this recovery phase, attracting an impressive $155 million in inflows, which constitutes approximately 88% of the total inflows for the week. This surge positions Ethereum as a leader in monthly performance, with total inflows reaching $150 million so far in August. Year-to-date inflows for ETH funds have now hit $862 million, the highest level since 2021. Analysts attribute this growth primarily to the recent launch of US spot-based ETFs, which have sparked renewed interest in Ethereum among institutional investors.
Positive Momentum for Ether ETFs
Cointelegraph reported that the newly launched US-based spot Ether ETFs saw their first week of inflows since their launch in late July, collectively bringing in around $105 million during the week beginning August 5. This positive trend highlights a significant shift in investor preferences, with many turning to Ethereum products as the market stabilizes.
In stark contrast, Bitcoin ETPs managed only $13 million in inflows for the same week, alongside troubling outflows of $366 million recorded month-to-date. This disparity underscores a growing preference for Ethereum over Bitcoin among institutional investors.
Short Bitcoin ETPs Face Major Outflows
Compounding the challenges for Bitcoin, short Bitcoin ETPs experienced their largest outflows since May 2023, totaling $16 million. This reduction has brought the assets under management (AUM) for short positions to their lowest level since the beginning of the year, indicating a significant exit of investors from these positions. Additionally, multi-asset or altcoin funds outperformed Bitcoin ETPs, attracting $18.3 million in inflows during the same period.
Market Recovery and Capitalization
The broader cryptocurrency market has demonstrated resilience, recovering approximately 20% since the major correction on August 5. As of August 13, the total market capitalization has rebounded to $2.2 trillion. The total AUM of institutional investment products has also seen a recovery, climbing back to $85 billion after experiencing a decline of more than $20 billion during the recent market downturn.
Price Movements
In terms of price recovery, Ethereum has rebounded strongly, recovering 23% since its dip below $2,200 on August 5, with current prices hovering around $2,700. Bitcoin, on the other hand, has seen a recovery of about 19%, rebounding from its slump below $50,000. This comparative performance further emphasizes the shifting dynamics in investor preferences between the two leading cryptocurrencies.
The recent data from CoinShares illustrates a clear trend of institutional investors gravitating towards Ethereum products as the market recovers from its recent downturn. With significant inflows into Ethereum ETPs and a notable shift away from Bitcoin, the landscape of cryptocurrency investment is evolving, potentially signaling a new era of preference for Ethereum among institutional players. As the market continues to stabilize, it will be interesting to observe how these trends develop and whether Ethereum can maintain its momentum in the coming weeks.
