What Weak Ethereum ETF Flows Mean For Institutional Appeal

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The crypto markets enjoyed some recovery lately but Ethereum ETFs only registered 1 day of positive flows in the last 3 days.

This result has been disseminating the narrative that the cryptocurrency has been underperforming.

Ethereum ETFs only registered $38.8 million worth of inflows on 22 April despite market wide recovery observed this week.

While the positive flows were a welcome relief, roughly $23.9 million worth of liquidity exited Ethereum ETFs the following day.

The outcome extended the negative flows observed in the last 2 weeks.

On the contrary, the recent wave of bullish excitement in the market saw strong institutional flows into Bitcoin.

For context, Bitcoin ETFs had over $2.2 billion worth of inflows from Monday to Wednesday, confirming robust institutional demand.

Meanwhile, Ethereum ETFs had a net $-10.5 million worth of net flows during the same three-day period.

This performance highlights weak institutional demand for Ethereum. An outcome that could no doubt impact ETH’s ability to recover.

ETH Underperformance is Not Just a Fluke

Ethereum ETF performance no doubt indicates that institutional demand for ETH has been weak.

But, this is not new for the cryptocurrency whose performance has been weak especially compared to Bitcoin and top altcoin rival Solana.

But is it just the institutional class of investors that are not buying or is the rest of the market in a similar situation?

ETH price action did bounce back by about 32.6% from its lowest price so far this month ($1,383) to its recent high this week ($1,835).

Price recovery confirmed that there was still significant demand in the market. It even managed to bounce back by a higher percentage that Bitcoin, although it is worth noting that rival SOL achieved almost double the gains.

Despite the recovery, declining ETH institutional demand could certainly undercut or slow down ETH’s recovery even in the long term. Unless institutional demand makes a strong comeback.

Nevertheless, this price performance does not necessarily impact network performance.

The Ethereum network remains one of the blockchains with the highest levels of network utility.

Its performance could possibly be the reason why ETH continues to sustain significant demand in the market.

Here’s How Demand for ETH Faired Recently

ETH exchange flows surged at the start of the week but it was short-lived judging by the rapid pace at which the exchange flows pivoted after 22 April.

The latest data revealed that exchange inflows were significantly higher than outflows as profit-taking extended its upside.

Exchange flows are only part of the picture but exchange reserves offered significantly more clarity. This is because ETH exchange reserves have been growing since earlier this month.

For context, there were roughly 19.88 million ETH coins in circulation which was the lowest level of reserves on exchanges.

That figure has since gone up to 19.60 million ETH coins at the time of observation.

ETH exchange reserves/ source: CryptoQuant

A closer look at ETH exchange reserves reveals that they have been moving in a wedge pattern. Moreover, it was underpinned by descending resistance and ascending support.

Now that price is retracing, ETH exchange reserves could potentially retest the descending resistance and trigger a new wave of demand.

This observation could significantly dictate the next ETH price move. As far as long term outlook is concerned, some recent CryptoQuant data may offer more insights.

For example, long term accumulators that never sell (denoted as accumulating addresses) reportedly acquired over 640,000 ETH in the last 48 hours.

This means the accumulating addresses contributed more than $1.1 billion worth of liquidity to the cryptocurrency.

While this may have significantly aided its upside, it also revealed that the biggest class of investors that purchased recently were long term holders.