Ethereum still lags behind Bitcoin, the world’s largest cryptocurrency, as recently floated ETFs have failed to boost demand for the second-largest cryptocurrency.
Ethereum spot funds launched in July suffered an eight-day losing streak, with total outflows of about $112 million, the longest streak of decline to date.
Ethereum was unable to regain market share lost following the sharp sell-off in August, as the abandonment of Japanese yen interest trading affected cryptocurrency markets and global equities.
While Bitcoin has risen 8% since then, ETFs investing directly in Bitcoin have seen positive investment flows.
Although Ethereum retains the largest share of decentralized finance activity, Ether is still looking for “new catalysts to support its rise,” according to Munib Khan, CEO at Kraken OTC.
Khan added that initial enthusiasm about Ethereum’s bullish potential appears to have waned.
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Meme coins
While Bitcoin has a fixed cap of 21 million coins, the number of Ether coins is not precisely defined, and the total number of coins in circulation has increased for most of this year.
Platforms such as Arbitrum and Optimism, which are helping Ethereum expand — also known as second-tier chains — are beginning to influence transaction fees on the network, according to Cissy Lou McCleman, founder of Finlink Partners.
Ethereum relies on burning part of the transaction fees it collects to permanently remove tokens from trading.
The shift in industry focus from decentralized finance projects to so-called memes also partially contributes to Ether’s poor performance compared to rival Solana, McClemman added. The Solana blockchain is very popular among issuers of meme coins.
Federal Reserve Chairman Jerome Powell on Friday gave a clear signal that the central bank is on track to cut interest rates from their highest levels in more than two decades, heralding a more favorable liquidity environment for global markets. While this led to a rise in the price of Bitcoin accompanied by strong inflows to ETFs, the same did not happen for Ether.
Bitcoin is now trading at $62,555, down 1.9% in the last 24 hours. Ether was at $2,621, down about 4% in the last 24 hours.
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