The sharp decline in Ethereum following the launch of spot ETFs signals emerging issues, according to 10x Research.
#Ethereum Crashing -> what’s going on? https://t.co/ciaqYVYuZh pic.twitter.com/czrg8YRwW6
— 10x Research (@10x_Research) July 25, 2024
According to analysts, the sell-off largely mirrors the familiar pattern observed during the launch of exchange-traded funds based on digital gold.
Experts explained that many traders “expected ETH-ETFs to ‘capture’ 20% of BTC-ETF inflows.” However, there was an underestimation of the market adage “sell the news.”
10x Research provided data on the outflow of funds from Grayscale’s ETHE, amounting to $481 million and $326 million in the first two days of trading, respectively.
In the view of specialists, the rapid sell-off of “initial investments” indicates a lack of confidence in sustained growth.
Analysts presented a bearish outlook for Ethereum, noting the asset’s overbought status ahead of the much-anticipated ETF launch.
“Ether may prove to be the weakest link, where fundamental indicators (new users, revenues, etc.) are stagnating or declining,” the specialists noted.
While Bitcoin enjoys the status of “digital gold,” Wall Street has yet to determine the value proposition of the second-largest cryptocurrency by market capitalization, they added.
In conclusion, experts warned of the risks of further price declines. Among the factors, they cited potential pressure from Mt.Gox clients, upcoming corporate reports in the US, and “weak seasonal trends in August and September.”
Earlier, QCP Capital described the market’s reaction to the ETH-ETF launch as “muted.”