For many major cryptocurrencies, the month of November has proven to be very turbulent so far. Both Ethereum (ETH) and Solana (SOL) saw their prices fall sharply—by 20% and 25% respectively—putting them at their lowest point since at least July. However, the behaviour of their Spot Exchange-Traded Funds (ETFs) reflects a completely opposite investor sentiment.

The big contrast: capital flow in ETFs

The biggest surprise lies in the way investors are allocating their capital in the ETFs that track these digital assets: Spot Ethereum ETFs recorded their third-highest weekly outflow since their inception last week, amounting to no less than $728.6 million. This made November the worst month so far for the ETH funds, with total outflows exceeding $1.2 billion, according to data from SoSoValue.

In contrast is the success story of the Spot Solana ETFs. Since their launch by Bitwise and Grayscale in late October, these funds have registered 14 consecutive days of inflow, accounting for a total of $382 million. This is a significant difference from the introduction of Ethereum ETFs, which recorded an outflow of $405.9 million in their first 14 days.

The role of market capitalisation

According to Simon Dedic, CEO of crypto investment firm Moonrock Capital, we must put the size of these ETFs into perspective. While the Solana ETFs are growing, they are less significant than the Ethereum ETFs when we look at the share of the total supply. Spot Ethereum ETFs currently hold nearly 6.4 million ETH—worth $20.1 billion—which accounts for 5.3% of the total Ethereum supply. Solana ETFs, on the other hand, possess only 0.6% of the total SOL supply.

Dedic also points out that the ETF flows of SOL and ETH are difficult to compare because they are in different phases: "Since the SOL ETFs have just launched, I wouldn't expect their flows to behave like ETH ETF flows, which have already stabilised after their early growth phase." The recent ETH outflows could therefore indicate a stabilisation or profit-taking in an already mature product.

Optimism despite market weakness

Tom Lee, Chairman of the largest Ethereum treasury firm, BitMine Immersion Technologies, provides a broader explanation for the overall weakness in crypto prices since the liquidation event of 10 October. Lee suggests that the sustained weakness has the characteristics of one or two market makers struggling with a severely compromised balance sheet.

"When a market maker has a ‘hole‘ in their balance sheet, they are seeking to raise capital and are reducing their liquidity functions in the market. This is the equivalent of Quantitative Tightening (QT) for crypto and has the effect of dampening prices."
 Lee is, however, optimistic about the long term, predicting that the cycle peak for crypto prices will likely arrive within 12 to 36 months.

Disclaimer: This is not financial advice. Always consider your own research or professional advice before investing.