Ethereum ETF Launch Set For $5 Billion Surprise, Says Top Crypto Analyst

People aren't bullish enough on ETH ETFs, says Fundstrat's Sean Farrell

By: Zack Guzman

July 1, 2024

Crypto investment inflows are rebounding from two brutal weeks as traders look ahead to the much-anticipated launch of Ethereum ETFs (despite a minor delay.)

This week: Crypto’s top analyst says people are underestimating what ETH ETFs could trigger, Abra launches a crypto treasury service that could spur institutional adoption, and even more crypto VCs coalesce around their next token darling. Read on for everything you need to know in crypto this week.

This week’s news recap is brought to you by Mezo, a Bitcoin Economic Layer. Put your bitcoin to work and use it for everything. HODL with a purpose.
This week’s news recap is brought to you by Mezo, a Bitcoin Economic Layer. Put your bitcoin to work and use it for everything. HODL with a purpose.

Crypto Outflows Finally Bottom

If you’ve been paying attention, it’s been a tough stretch for the Bitcoin ETFs and institutional crypto interest. But after consecutive weeks of nearly half a billion in outflows, last week finally showed the bleeding stopped. According to CoinShares, net flows were nearly neutral for the week.

Crypto asset flows finally bottomed after a stretch of consecutive brutal weeks. (Source: CoinShares)
Crypto asset flows finally bottomed after a stretch of consecutive brutal weeks. (Source: CoinShares)

Interestingly, Ethereum continued to show weakness with the largest outflows since August 2022 ($61 million) bringing the last two weeks of outflows to $119 million. Ethereum is now the worst-performing asset year-to-date in terms of net flows. However, that largely makes sense if you consider much of the reason for that is likely due to rotational moves ahead of the debut of Ethereum ETFs.

ETH ETFs are expected to make their debut next week (after July 8) given delays in the last round of edits in the back-and-forth with the SEC. So what kind of trading activity should we expect to see?

An ETH ETF Surprise Is Coming

It’s hard to judge what may be consensus for what the Ethereum ETFs are expected to attract. Coinage has done our best tracking sentiment, but according to Fundstrat’s Sean Farrell, people are not nearly bullish enough.

“Just talk to anybody in the industry right now or just go on social media — I don't know if that's the best barometer, but it does seem to me that sentiment is rather poor right now,” he said. According to his analysis — that sets up rather nicely for where ETH’s price heads in July. Already, as analysts at Coinbase point out, July has always been a positive month for bitcoin’s price following a negative June — but if ETH inflows surprise to the upside, look out.

According to Farrell’s analysis, about $5 billion is likely to flow into ETH ETFs over their first five months. To compare, that’s about 30% of what Bitcoin ETFs were able to attract over the same time period. While that would be a lower number, it’s all about beating expectations.

Importantly, Farrell notes that the macro set up is much friendlier this time around, and the Grayscale trust in question (Ethereum Trust vs. Bitcoin Trust last time) is less likely to bleed outflows that hurt the top-line flows number. (Reason being there aren’t as many holders caught up in bankruptcy this time around who might need to offload their Ethereum Trust holdings.)

Abra Makes Onboarding Easier

ETFs have gotten a lot of attention this year, but one big tool that could make onboarding family offices and institutions even easier just went live at Abra.

Abra launched their crypto treasury service on Monday, which is fairly important when you consider that Abra is an SEC registered investment advisor (RIA) working closely with big money clients. After the collapse of Celsius and BlockFi, Abra is taking a non-custodial approach to let their customers maintain title of their digital assets. As Abra CEO told us just a few weeks ago, demand is rising as interest moves beyond just simply holding BTC in an ETF.

“We're seeing a lot of corporate interest from institutional treasury in using the RIA model to earn a safe yield, not only a safe yield on dollars, but even to get exposure to Bitcoin and potentially even earn yield on the Bitcoin, and that's new. We didn't see that, at least to the degree we're seeing it now in the past,” he said.

More VCs Pile In On TON Bet

Last week, we highlighted Pantera made its largest ever investment in the TON token, due to Telegram’s sheer size of distribution. Over the weekend, The Block reported that other VCs had followed suit, including Kingsway Capital, Ryze Labs, and Animoca Brands.

TON is up 450% over the last year, and continues to rise on the hopes that Telegram will be able to convert a significant chunk of its existing 930 million users into Web3 users, while also attracting developers to continue the momentum its shown.

It’s worth noting that a lot of the early traction is tied to very simple in-app games, and in the past a rush of excitement around Web3 gaming has not necessarily panned out great (a la Axie Infinity.) Much appreciated to Dragonfly’s GP Rob Hadick for giving us his take on why his fellow VCs are all about it this time around:

Other Web3 Headlines

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