The fund doubled from $5 billion to $10 billion in just 10 days—a growth Bloomberg’s Eric Balchunas called a “God candle.” This surge shed some light on the rising dominance of spot crypto ETFs, with ETHA trailing only BlackRock’s IBIT and Fidelity’s FBTC. Meanwhile, Ethereum ETFs are experiencing strong capital inflows, pulling in $4.4 billion over the past two weeks. Despite the bullish momentum, 10x Research warns that Ethereum may face short-term headwinds due to overbought conditions and rising wETH borrowing costs. Historically, however, Ethereum performs strongest in Q4.
ETHA Breaks $10 Billion
BlackRock’s iShares Ethereum ETF (ETHA) officially joined the ranks of the fastest-growing exchange-traded funds (ETFs) in history. According to Bloomberg ETF analyst Eric Balchunas, ETHA reached $10 billion in assets under management (AUM) just 251 days after its launch.
Even more remarkable, the fund surged from $5 billion to $10 billion in only 10 days—a momentum Balchunas described as the ETF equivalent of a “God candle.” This refers to a massive, rapid upward movement typically seen in trading charts.
This rapid ascent places ETHA as the third-fastest ETF to reach the $10 billion milestone, ahead of other well known traditional finance products like the JPMorgan Nasdaq Equity Premium Income ETF (JEPQ), which took 444 days to hit the same mark. The top two positions are occupied by other spot crypto ETFs: BlackRock’s own iShares Bitcoin Trust (IBIT), which reached $10 billion in just 34 days after its January 2024 debut, and Fidelity’s Wise Origin Bitcoin Fund (FBTC), which did so in 54 days.
Nate Geraci, president of NovaDius Wealth Management, pointed out that this feat by ETHA proves the growing dominance of spot crypto ETFs in an industry that spans over three decades and includes close to 4,400 different products.
ETHA’s surge also coincides with a sharp uptick in investor interest in Ethereum-based funds. Data from SoSoValue reveals that Ether ETFs in the United States experienced a consistent 14-day inflow streak, pulling in $4.4 billion in net capital since July 3.
Ethereum ETF flow (Source: Farside Investors)
This streak includes a single-day record inflow of $726.7 million—which was the highest daily total since ETHA’s debut last year. In contrast, Bitcoin ETFs, which were also recently on a 12-day inflow streak, have now entered a period of decline after registering $289 million in outflows over the past three trading sessions.
This shift could mean that there is a potential rotation in investor focus from Bitcoin to Ethereum as momentum builds in the latter's ETF market.
Ethereum May Struggle Through Q3
Despite its current momentum, Ethereum may be facing a turbulent period in the near term as market indicators suggest vulnerability and rising costs associated with borrowing wrapped Ether (wETH) on DeFi platforms. According to Markus Thielen, head of research at 10x Research, Ethereum appears overbought and technically stretched, particularly as the market enters a traditionally quieter summer period in the US, especially in August.
Thielen shared in an interview that technical indicators are signaling overvaluation, and combined with seasonal trading slowdowns, this could lead to increased volatility for Ethereum.
At press time, ETH was trading hands at $3,596 after its price experienced a 1.78% drop over the past 24 hours of trading. The altcoins price was, however, still able to climb by more than 45% over the past month.
ETH’s price action over the past month (Source: CoinMarketCap)
One of the key concerns centers around the spike in variable borrowing costs for wETH. This tokenized form of Ether is used heavily in decentralized finance, and has become less attractive to traders as profitability wanes.
Thielen’s market analysis mentioned that usage of lending platform Aave soared from 86% to 95% since July 8, which indicates that borrowing demand is now outpacing available supply. As a result, the cost to borrow wETH increased quite a bit, leading to the likelihood of position unwinding among those who borrowed ETH to pursue yield-generating strategies.
Many of these traders have been engaging in “looping” strategies, where borrowed ETH is used to stake and then borrow again to enhance returns. These strategies are only viable when borrowing rates stay low and the stETH-to-ETH peg holds steady. However, with over 90% of ETH loans utilizing variable interest rates, borrowers are now very vulnerable to rapidly rising borrowing costs. If these elevated rates persist, Thielen warns that it could have much wider implications for the Ethereum ecosystem.
Ethereum quarterly returns (Source: CoinGlass)
Despite these short-term concerns, Thielen is still optimistic about Ethereum’s long-term outlook. He anticipates a more favorable setup after September, due to historical data from CoinGlass showing Q4 as Ethereum’s strongest quarter, averaging a 23.85% return. This is a big difference from Q3, which tends to be more subdued with an average gain of 5.60%.
