Ethereum shows mixed signals as price surges due to ETF outflows.

By Crypto Gloom On Sep 27, 2024

Key Takeaways

Ethereum’s weekly fees reached $45 million, the highest since June 10, 2024.
The Ether ETF experienced outflows of more than $79 million on Monday, the largest since July.

Ethereum (ETH) is showing conflicting market indicators as on-chain data developments continue to result in outflows from spot Ethereum exchange-traded funds (ETFs).

According to IntoTheBlock’s “On-chain Insights” newsletter, the price of ETH has surged more than 7% in the past week, with addresses “in the money” increasing from 59% to 66%. Additionally, 82% of ETH trading volume is currently profitable.

Moreover, network activity has increased significantly, with weekly fees reaching $45 million, the highest since June 10, 2024. Ethereum derivatives markets also show renewed optimism, evidenced by positive changes in the 30-day moving average funding rate.

However, these positive developments contrast with massive outflows from the Ether ETF, which experienced its largest withdrawal since July, with more than $79 million removed on September 23 alone.

IntoTheBlock analysts highlighted that these outflows hint at a gap between price movements and investor confidence in Ether’s future prospects.

These mixed signals occur because both cryptocurrency and stock markets react similarly to macroeconomic factors, particularly the decisions of the U.S. Federal Reserve. The correlation between U.S. stocks and Bitcoin reached a two-year high, surpassed only in the second quarter of 2022.

Ethereum’s network activity and price figures have improved, but it still struggles to capture the attention of traditional financial investors compared to Bitcoin’s “digital gold” story.

These differences highlight the complex relationship between cryptocurrency markets and the traditional financial sector as they continue to evolve.

Optimistic developments on the sidelines

Despite significant leaks, Ethereum has made significant developments recently.

Financial consulting firm Guggenheim has issued $20 million worth of tokenized commercial paper through AmpFi.Digital, a company that uses Ethereum infrastructure to provide tokenization services to institutional clients.

Visa also announced a platform to help banks tokenize fiat-backed assets. The Visa Tokenized Asset Platform (VTAP) will also leverage Ethereum technology to create digital representations of real-world assets (RWA).

In particular, Ethereum dominates the tokenized US Treasury bond market. According to RWA.xyz data, more than $1.5 billion in tokenized U.S. government securities are issued on Ethereum, representing about 70% of the sector’s market capitalization.