The Spot Ethereum ETFs haven’t exactly gotten off to the perfect start, with these funds experiencing mixed flows in their first three days of trading. Crypto research firm 10x Research has provided some answers as to why institutional investors aren’t so enthusiastic about these funds.

Wall Street Doesn’t Fully Understand What ETH Is About

10x Research suggested in a recent report that institutional investors haven’t warmly received the Spot Ethereum ETFs because they don’t fully understand what it is about. The report, written by Markus Thielen, noted that these Wall Street investors “usually don’t place bets on things they don’t understand.”

Interestingly, Bloomberg analyst Eric Balchunas pointed out this issue immediately after the Spot Ethereum ETFs were approved in May. Back then, he noted that one of the challenges these fund issuers would face was distilling ETH’s use case in an “easy-to-understand” way, just as Bitcoin is easily referred to as “digital gold.”

10x Research again highlighted this issue, alluding to the fact that the Spot Ethereum ETF issuers have so far had a hard time explaining ETH to these traditional investors. The research firm specifically referred to BlackRock’s description of ETH as “a bet on blockchain technology,” but these investors still don’t look hooked.

Additionally, 10x Research noted that the Spot Ethereum ETF issuers haven’t really made an effort to create awareness of their respective funds, with these funds lacking major marketing campaigns. This lack of an easy-to-understand narrative for Ethereum and the efforts from Spot Ethereum ETF issuers form part of the reasons the research firm remains bearish on ETH.

Thielen remarked, “Ethereum might be the weakest link, where fundamentals (new users, revenues, etc) have been stagnant or lower.” The research firm also alluded to ETH’s diminishing use case in this market cycle as another reason to be bearish on ETH. 10x Research argues that Solana, especially with its superior meme coin ecosystem, has stolen ETH’s shine in this cycle, which is why SOL has been outperforming ETH.

Meanwhile, from a technical perspective, 10x Research highlighted the stochastics indicator, suggesting that ETH is currently overbought. They warned that the crypto token will likely experience significant declines in the short term and stated that “it might make sense to press the ETH short a bit longer.”

Outflows Plague The Spot Ethereum ETFs

According to data from Soso value, the Spot Ethereum ETFs witnessed a net outflow of $152.3 million on July 25 (day 3 of trading), with Grayscale’s Ethereum Trust (ETHE) solely responsible for this development with an individual net outflow of $346.22 million. The other Spot Ethereum ETFs recorded net inflows, but the amount that flowed into these funds wasn’t enough to plug the bleed.

Since they began trading on July 23, these Spot Ethereum ETFs have witnessed a cumulative total net outflow of $178.68 million, with $1.16 billion already flowing out from Grayscale’s ETHE in the first three days of trading. These Spot Ethereum ETFs enjoyed a great outing on the first day of trading, with a net inflow of $106.78 million on July 23.

However, they eventually succumbed to the outflows from Grayscale’s ETHE, witnessing a cumulative net outflow of $133.16 million on day 2 of trading and a net outflow of $152.3 on July 25. The outflows from ETHE are already putting significant selling pressure on ETH, potentially leading to price declines for the crypto token in the short term until the other Spot Ethereum ETFs begin to witness an increased demand that can shore up the Grayscale outflows.