Grayscale ETH ETF stems bleeding as activity spikes on Ethereum

The Grayscale Ethereum Trust (ETHE) has posted its first day of zero outflows, ending a consecutive daily onslaught of outflows since its launch. 

It comes as Ethereum and several of its layer-2 networks witnessed a surge in on-chain activity.

On Aug. 12, Ether (ETH) exchange-traded fund (ETF) flows flipped positive for the fifth time since their launch on July 23, aided by ETHE posting its first day of zero outflows, per Farside data.

In total, ETHE has hemorrhaged nearly $2.3 billion in Ether since its launch.

Prior to its conversion, ETHE held a total of $9 billion in ETH on its books, meaning the fund has shed more than 25% of its total holdings in the two and a half weeks the ETFs have been live. 

In comparison, Grayscale’s Bitcoin Trust (GBTC) took close to four months before it saw its first day of non-outflow. 

Notably, Grayscale’s first day of zero outflows came amid a sharp uptick of activity on the Ethereum network, namely across decentralized exchanges and its layer-2 networks.

While trading volumes across Solana-based DEXs declined by 10% in the last 24 hours, trading volumes across Ethereum and Base rose 12% and 11% respectively within the same time frame, according to DeFiLlama data.

Activity on Ethereum Layer-2 networks has also been heating up, with a record number of new monthly L2-based addresses being created on the Ethereum-based DEX UniSwap.

Uniswap saw a total of 8.65 million new addresses created across layer-2 networks in July, nearly double that of the 4.93 million added in June, per Dune Analytics data.

In an Aug. 9 post to X, Leon Waidmann noted that Base and Arbitrum touted 2.64 million and 1.37 million weekly active users respectively.

Meanwhile, a total of 73 Ethereum layer-2 networks posted a cumulative 298 transactions per second (TPS) of network activity on Aug. 12, just 34 TPS from the previous all-time high of 322 TPS reached on July 18, per L2 beat data.

The total value locked across all Ethereum L2s now stands at $37.7 billion, while Ethereum touts $85 billion in TVL on its mainnet.

Dwindling outflows could be a bullish catalyst

Several analysts have looked to dwindling ETHE outflows as one of the primary bullish catalysts for the price of Ether in the coming months.

They suggested that ETH’s price could chart a similar course to Bitcoin’s (BTC) in the wake of its spot ETF approvals — which was also marred by heavy outflows from the Grayscale Bitcoin Trust (GBTC).