Why Is ETH Price Struggling Despite The Spot Ethereum ETFs Launch?
26 Julio 2024 - 12:30PM
NEWSBTC
Post the Spot Ethereum ETFs launch, the ETH price has continued to
struggle unexpectedly, proving that the launch of the Spot ETFs
were a ‘sell the news’ event. So far, the second-largest
cryptocurrency by market cap has lost around 10% of its value since
the Spot Ethereum ETFs trading began on Tuesday, July 23, and could
see further decline from here, according to an analysis from
Matrixport. Spot Ethereum ETFs Triggers Selling Following the
launch of the Spot Ethereum ETFs, there was a lot of excitement in
the market, especially around the fact that investors could now
gain exposure to ETH without having to directly buy the underlying
token. However, this excitement has been short-lived as days after
the launch, the ETH price continues to struggle. Related Reading:
End Of The Road? Shiba Inu’s Shibarium Sees Massive 80.3% Crash In
Active Accounts In a report released on Thursday, Markus Thielen,
Head of Research at Matrixport, outlined a number of reasons why
the ETH price was declining. As Thielen explains, while the inflows
crossed $100 million on the first day, the Grayscale Ethereum fund
had been suffering outflows. Just like with the Spot Bitcoin ETFs
launch, the Grayscale ETH fund, which holds around $9 billion in
ETH, began recording outflows. This is due to the fact that
Grayscale’s management fees remain high with competitors offering
fees as low as 0.19%. On the first day alone, $481 million flowed
out of the fund, and $326 million followed the next day. In
addition to this, the Mt. Gox distributions began around the time
of the Spot Ethereum ETFs launch, so this even also put extra
selling pressure on the crypto market. Just as the Bitcoin price
did with the Spot Bitcoin ETFs, the ETH price has responded
negatively to these outflows, leading to a price decline below
$4,200. Will The ETH Price Recover From Here? Outflows from the
Grayscale ETH fund since the launch of the Spot Ethereum ETFs have
been one of the major factors driving the ETH price decline.
However, it is not the only bearish development that has emerged
for the cryptocurrency. Thielen points out that the ETH price may
have reached the top, using the daily stochastics indicator as a
guide. Now, when the value of this indicator is low, it often
means a buying opportunity and the price is hitting a
low. Meanwhile, the value being high suggests that the ETH
price may have hit its top. Related Reading: Crypto Analyst Says
Bitcoin Is Headed For $260,000 But This Must Happen First According
to the report, the ETH price had hit a score of 92% in the days
leading up to the Spot Ethereum ETFs launch. Usually, a score above
90% is bearish for the price as it means the cryptocurrency is
currently in overbought territory. Subsequently, the value of the
stochastic indicator is expected to decline as investors offload
their holdings. So far, there have been a 5% decline from 92% to
87%, suggesting that there is still a long way to go before the ETH
price stops bleeding. “Considering the recent rally and the
potential overhang from Mt. Gox, the US earnings season, and the
weak seasonals for August and September, it might make sense to
press the Ethereum short a bit longer,” Markus Thielen said in
closing. Featured image created with Dall.E, chart from
Tradingview.com
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