- ETH plunged harder than BTC despite ‘expected’ ETF catalyst by mid-July
- Mixed views by analysts on how the market will receive the ETH ETF amidst negative sentiment.
Ethereum [ETH] wasn’t spared in the ongoing market rout despite a potential ETF launch by mid-July.
The second-largest digital asset shed over $500 since the 1st of July, dropping from $3.4K to a low of $2.8K, erasing all gains netted after partial ETF approval in May.
However, Ethereum educator Sassal claimed that there was ‘no bearish’ factor apart from possible outflows from Grayscale’s ETH trust, ETHE.
“This entire run has now been retraced since the ETFs got approved on May 23rd…The main overhang for ETH right now, in my opinion, is the possible Grayscale ETHE outflows.”
He added that there were “fundamental reasons to be bearish going forward” and cited possible tailwinds from increasing regulatory clarity and likely Fed rate cuts in later 2024.
ETH dropped harder than BTC
Despite Sassal’s optimistic view, the recent dump hammered ETH more than BTC. On the weekly front, as of press time, BTC was down about 11%, while ETH declined 14%.
Source: ETH vs. BTC weekly drawdowns, TradingView
The unproportionate decline was unprecedented and baffled some traders, given the expected ETH ETF launch in two weeks.
Some market observers claimed that ETH’s hard dump was due to a lack of a strong narrative. Another user, Evans, suggested that the market was risk-off and that potential ETHE outflows could dent the ETH ETF’s expectations.
“Everyone fears grayscale unlock (more impactful in low-volume summer). The market is risk-off, and everyone expects little to no demand for ETH out of the gate.”
In the meantime, ETH pullback hit the golden zone at 61.8% Fibonacci retracement level, based on the 2024 lows and highs.
Source: ETH/USDT, TradingView
The 61.8% Fib level ($2.8k) doubled as a daily order block (marked cyan) and has been a crucial support in the first half of 2024. Whether the support hold could depend on Bitcoin’s [BTC] next move.
However, investors’ risk-off approach was further reiterated by negative outflows in the derivatives market.
Since the 1st of July, ETH has seen net outflows totaling $4.5 billion, per Coinglass data, underscoring the bearish sentiment and possible lukewarm reception to the ETF launch.
Source: Coinglass
However, a recent Bloomberg report noted that crypto market sentiment could only improve if the Fed turns dovish and offers “one or two interest cuts.”
This news is republished from another source.
