Analysis of ETF fund flows and their impact on the cryptocurrency market

The 30-day moving average (30D-SMA) of net flows for Ethereum and Bitcoin ETFs has turned negative since early November and has continued to do so until now.

🟢What does negative net flow mean?

Negative net flow means that there is a greater outflow of money from ETFs compared to the inflow into them. In other words, institutional investors (such as banks and large investment funds) are withdrawing their money from these funds instead of injecting more.

This signal reflects a decline in institutional participation, reinforcing the idea that the market is undergoing a phase of liquidity contraction. This contraction not only affects ETFs but also extends its impact to the broader cryptocurrency market.

The relationship between net flows and the price of Ethereum

There is a clear correlation between the net flows of ETFs and the price of Ethereum. When flows are positive (with green bars), we observe a rise in price, and the opposite is true when flows are negative (with red bars).

Why does this happen?

Positive flows indicate increased demand for Ethereum from institutions, which drives the price up. Negative flows, on the other hand, mean decreased demand and increased supply, leading to downward pressure on the price.