Ethereum
What’s Next for Ethereum After ETH Erases ‘Pre-ETF Approval’ Gains
- ETH Drops Harder Than BTC Despite ETF Catalyst “Expected” By Mid-July
- Analysts have mixed views on how the market will receive the ETH ETF amid negative sentiment.
Ethereum [ETH] has not been spared from the current market rout, despite the potential launch of an ETF by mid-July.
The second-largest digital asset has lost more than $500 since July 1, falling from $3.4k to a low of $2.8k, erasing all gains made after the ETF’s partial approval in May.
However, Ethereum educator Sassal claims that there were no “bearish” factors outside of possible capital outflows from Grayscale’s ETH trust, ETHE.
“This entire run has now been retraced since ETFs were approved on May 23rd… The main headwind for ETH right now, in my opinion, is the possible exit of Grayscale ETHE.”
He added that there were “fundamental reasons to be bearish going forward” and cited possible tailwinds from greater regulatory clarity and likely Fed rate cuts later in 2024.
ETH fell more sharply than BTC
Despite Sassal’s optimism, the recent drop has hit ETH harder than BTC. On the weekly front, at press time, BTC was down about 11%, while ETH was down 14%.
Source: ETH weekly drops vs. BTC, TradingView
The disproportionate decline was unprecedented and disconcerted some traders, given the expected launch of the ETH ETF in two weeks.
Some market observers have claimed that the abrupt ETH dump was due to a lack of a strong narrative. Another user, Evans, suggested that the market was risk averse and potential ETHE outflows could shake expectations for the ETH ETF.
“Everyone is worried about the grayscale unlock (most impactful in summer, low volume period). The market is risk averse and everyone expects little to no demand for ETH from the start.”
Meanwhile, ETH’s pullback has reached the golden zone at the 61.8% Fibonacci retracement level, based on the 2024 lows and highs.
Source: ETH/USDT, TradingView
The 61.8% Fibonacci level ($2.8k) also served as a daily order block (marked in cyan) and provided crucial support during the first half of 2024. Whether the support holds could depend on Bitcoin [BTC] next step.
However, the aggressive approach of investors was reiterated by negative outflows in the derivatives market.
Since July 1st, ETH has experienced net outputs totaling $4.5 billion, according to data from Coinglass, underscoring the bearish sentiment and perhaps lukewarm reception to the ETF launch.
Source: Coinglass
However, a recent Bloomberg report note that cryptocurrency market sentiment could only improve if the Fed turned dovish and offered “an interest rate cut or two.”
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