- Bitcoin whales have slowed their transactional activity and shifted to a “risk-off” mode as the market retreats.
- An expert predicts Ethereum could fall to $2400 following the launch of ETFs, as these instruments may not meet investor expectations.
As the leading cryptocurrency fell below $63,000, whales reduced their activity in the derivatives market, according to CryptoQuant CEO Ki Young Ju.
#Bitcoin IFP indicator turned red. Whale traders on derivatives exchanges are in risk-off mode. pic.twitter.com/wv1XK78FoN
— Ki Young Ju (@ki_young_ju) June 22, 2024
“Whale traders on derivatives exchanges are in risk-off mode,” he noted.
Ju pointed to the “reddening” of the inter-exchange flow pulse (IFP), which tracks asset movements between spot and derivatives markets, reflecting investor sentiment.
The red IFP indicator signifies an increase in traders withdrawing bitcoins.
At the time of writing, digital gold is trading at $62,280, having dropped 6% over the week.
Alongside bitcoin, the entire cryptocurrency market has plummeted. Among the top ten coins, Solana suffered the most, dropping 15% to $124.
Simultaneously, the cryptocurrency fear and greed index dropped to a “neutral” level of 51, the lowest since early May.
According to SoSoValue, U.S. spot bitcoin ETFs recorded fund withdrawals throughout last week. On June 21, the net outflow from exchange-traded funds was $105 million.
Despite the overall negativity, some experts interpret various indicators as potential bullish signals. Glassnode analyst James Check noted that the “Bitcoin Sell-side Risk Ratio has reached levels indicating it’s time for the market to move [up].”
The #Bitcoin Sell-side Risk Ratio has reached levels signalling it is time for the market to move.
All the profits that were going to be taken, have been. Same for losses.
The market needs to find a new price range to stoke the fire of fear, greed, panic, or euphoria. https://t.co/M3rqN4Sx2m pic.twitter.com/Oiw5iMi7PG
— _Checkmate ??⚡☢️?️ (@_Checkmatey_) June 24, 2024
“All the profits that were going to be taken, have been. Same for losses. The market needs to find a new price range to stoke the fire of fear, greed, panic, or euphoria,” he added.
Overvalued Ethereum
The second-largest cryptocurrency by market capitalization risks falling to $2400 after the launch of spot exchange-traded funds based on the asset, according to Mechanism Capital founder and partner Andrew Kang.
— Andrew Kang (@Rewkang) June 23, 2024
In his view, unlike bitcoin, Ethereum attracts less institutional interest. Given the low cash flows in the network, there are few incentives to convert the asset into an ETF form, Kang noted.
“What growth potential can an ETH-ETF provide? I wouldn’t argue much. After the launch of exchange-traded funds, my expectations will be from $2400 to $3000,” the expert wrote.
Kang suggested that Ethereum instruments will attract only 15% of the volume that bitcoin-based products received:
“Crypto-native expectations are inflated and do not align with the true preferences of TradFi. The effect of ETFs is overrated.”
Presenting Ethereum’s blockchain to investors as a decentralized financial settlement layer, a world computer, or a Web3 application store “holds some weight.” But it will turn out to be just an “obsession” when looking at on-chain data, Kang argues.
He noted that the network’s future as a “cash flow machine” would look more promising with high fees. However, currently, Ethereum resembles another overvalued tech stock, the Mechanism Capital founder emphasized.
Kang acknowledged that BlackRock and other financial institutions have begun taking steps in tokenizing real-world assets on Ethereum. However, the expert is unsure what impact this will have on the price.
According to his calculations, the ETH/BTC ratio could fall from the current 0.054 to 0.035 over the next 12 months. Meanwhile, Kang believes that bitcoin’s rise to $100,000 could “drag” Ethereum to a new all-time high.
Previously, QCP Capital analysts predicted Ethereum’s rise to $4800 following ETH-ETF approval. Experts believe that demand amounting to 10-20% of inflows into bitcoin funds will trigger positive movement.
As reported in K33 Research, the net inflow into products in the first five months after trading began was estimated at $3.1–4.8 billion.
VanEck has raised its Ethereum forecast to $22,000 by 2030.