U.S.-listed spot Ethereum ETF observed substantial net inflows amounting to approximately $49 million on Monday, even as the value of ETH plummeted by 20%, underscoring the persistent demand for the second-largest cryptocurrency by market capitalization.

Significant Price Decline and Market Dynamics

On Monday, Ether experienced a precipitous 20% drop, marking its most severe one-day price decline since 2021. This sharp fall was precipitated by major crypto trading firm Jump Crypto transferring vast quantities of ETH to centralized exchanges, likely in anticipation of substantial sales. The broader crypto market also faced a downturn, exacerbated by over $340 million in ETH futures liquidations, amplifying the pressure on traders.

Professional Investors Capitalize on the Dip

Despite the tumultuous market conditions, astute investors seized the opportunity to buy at lower prices. According to data monitored by SoSoValue, ETH ETFs saw trading volumes surpass $715 million, the highest since July 30. Leading the inflows was BlackRock’s ETHA, which attracted $47 million. Fidelity’s FETH and VanEck’s ETHV each recorded $16 million in inflows.

Grayscale’s ETHE stood out as the sole product with outflows, amounting to $46 million, while its smaller counterpart, the Ethereum Mini Trust (ETH), saw $7 million in inflows.

Long-Term Demand and Market Trends

Despite these recent inflows, the overall net outflows for these ETFs since their inception on July 23 total $460 million, suggesting that long-term demand for ETH ETFs is still maturing. In stark contrast, Bitcoin ETFs garnered over $1 billion in net inflows within their first 12 days of trading.

ETF flows are pivotal in discerning market trends, offering insights into investor sentiment and capital allocation.

Ethereum Network Resilience

In parallel, several market analysts noted that applications built on the Ethereum network demonstrated robustness amidst the sharp price decline, indicative of solid underlying fundamentals.

“Ether’s significant price drop was predominantly driven by Jump Crypto’s sell-off and liquidation of other substantial whale wallets,” explained Alice Liu, lead researcher at CoinMarketCap, in an email to CoinDesk. “On a brighter note, LSDFi withstood the stress test: there has been no notable increase in Lido’s withdrawal queue, and liquid staking remains stable across various projects.”

LSDFi, or liquid staking derivatives finance, refers to blockchain-based activities that enable users to earn rewards while retaining liquidity through derivative tokens.

Revival of the DeFi Market

Liu further highlighted a positive outcome for ETH: the recent liquidation appears to have rejuvenated the DeFi market, with activities on DeFi platforms significantly increasing on the network. Additionally, gas fees have receded to a more manageable range of 10-15 Gwei, down from the 370 Gwei recorded earlier.