Big investors are pulling money out of ether funds, and the second-largest cryptocurrency is feeling it more than bitcoin.
Ether, the cryptocurrency that powers the Ethereum network, has had a harder month than bitcoin. On Wednesday, Oct. 14, it fell about 5% to around $2,437 after a hotter-than-expected inflation report, according to CoinMarketCap data cited by The Crypto Times. That followed the biggest week of withdrawals from U.S. spot ether exchange-traded funds since January.
The ETF outflows
Spot ether ETFs let investors own ether through a regular brokerage account without managing a crypto wallet. Money flowing into or out of these funds is a useful signal of how larger investors feel.
In the week ending Oct. 9, investors pulled about $542 million out of U.S. spot ether ETFs, the largest weekly outflow since January, according to SoSoValue data. BlackRock's iShares Ethereum Trust, known by its ticker ETHA, accounted for roughly $477 million of that. Another $85 million left ether funds on Oct. 12. Reports at the time described a streak of eight or more straight days of withdrawals.
Ether slipped below $2,500 as the outflows piled up and fell to around $2,425 on Monday, Oct. 12, before Wednesday's decline.
Why ether is under pressure
Several forces are weighing on crypto at once. Leveraged traders, those using borrowed money, have been forced to sell as prices fall. A strong U.S. dollar and Treasury yields above 5% make safer investments more appealing. And September's inflation report, which showed prices up 3.7% over the year, raised the odds that the Federal Reserve will raise interest rates again at its Oct. 27–28 meeting.
Ether often moves more sharply than bitcoin in both directions, since it's a smaller market and more tied to activity on the Ethereum network, such as decentralized finance apps and token trading. When investors get nervous, ether tends to fall faster.
What ETF flows can and can't tell you
ETF flows are a helpful mood gauge, but they're not a crystal ball. Outflows can reflect big institutions rebalancing, taking tax losses or moving money between funds, not just a loss of faith. Flows can also reverse quickly. Bitcoin ETFs, for example, saw money come back in on Oct. 13 after a week of outflows.
What this means for your wallet
If you own ether directly or through an ETF, price swings of 5% in a day are normal. The key questions are whether the amount you hold fits your risk tolerance and whether you could leave it alone through a long downturn. Ether has fallen by more than half in past bear markets before recovering.
If you're thinking of buying after a drop, consider spreading purchases over time instead of trying to time the bottom. And remember that ETFs charge an annual fee, called an expense ratio, while holding crypto directly brings its own costs and security responsibilities. Compare the trade-offs before you choose.
Above all, keep crypto as a small slice of a diversified plan, and make sure your emergency savings are in a safe, accessible account first.
This article is for education only and is not financial advice. Everyone's situation is different.
Content on The Evergreen Edit is for educational and informational purposes only and is not individualized financial, investment, tax or legal advice. Learn more.
This article is for educational purposes only and isn't personalized financial, tax or legal advice. Consider talking with a qualified professional about your situation.
Kiara Miller — Founder & Editor
Kiara Miller is the founder and editor of The Evergreen Edit. He has been doing independent finance research for two decades and reviews every article before it's published.
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