Spot Ethereum ETFs Begin Trading:
Another big day for cryptocurrency as the Ethereum Spot ETF was launched and eclipsed $1 billion of volume in its first day of trading. However, the net inflows of the ETF was just over $100 million. Meaning the outflows from Grayscale totalled almost half a billion dollars.
Source: https://farside.co.uk/?p=1518
Similarly to the Spot Bitcoin ETFs first day of trading, it was highly volatile and turned out to be a sell the news event. The day saw a net inflow of $203 million, this was greatly hindered by the mass outflows by Grayscale of almost $500 million.
There are parallels between Bitcoin and Ethereum price action at the first day of their respective ETFs trading.
Both BTC and ETH were approximately 40% away from their previous all time highs.
The launch days were ‘sell the news’ events with the majority of the gains and price increase being made in the lead up to the event.
Grayscale BTC and ETH ETFs were finally allowed to trade again, which lead to major outflows.
If Ethereum is to follow Bitcoin’s post ETF price action, we may see a retracement in Ethereum’s price due to the mass selling by Grayscale. The first fortnight of BTC ETFs trading saw a 20% retracement in BTC due to Grayscale outflows. A similar trend may occur with ETH as Grayscale outflows should sustain selling pressure on ETH until they exhaust their outflows (a 20% pullback would see Ethereum at ~$2,800).
The ETF hype drove BTC to new ATHs prior to the BTC Halving event, this occurred 2 months after BTC ETF was launched. Aforementioned, ETH is ~40% from its ATH, will we see a new ATH set by ETH in the coming months as a result of the ETFs?
Mt Gox. Continues to Make Repayments:
This positive news has been overshadowed by Mt Gox. moving almost $3 Billion dollars worth of BTC onto exchanges to continue repayments. What was one of the major catalysts of driving BTC down to 54k has reared its ugly head again. If Mt Gox is to sell all of this BTC, then it will outweigh all of the BTC ETF inflows over the last couple weeks which helped BTC recover from $53.5k to the current price. Whilst it is unlikely to see these repayments negate all of the gains BTC saw as a result of the inflows, it would be wise to expect a slight pullback.
If a pullback is to occur, this should be seen as a time to 'buy the dip' before BTC continues on higher.
While the immediate impacts of the Ethereum Spot ETF launch have mirrored the volatility seen with Bitcoin's ETF debut, the long-term outlook remains highly favorable. The initial sell-the-news reaction and significant outflows from Grayscale have temporarily pressured Ethereum's price. However, if Ethereum follows Bitcoin's post-ETF trajectory, any short-term retracements could pave the way for substantial gains and potentially a new all time high in the months ahead. We remain bullish on Ethereum, confident that the long-term effects of an Ethereum ETF will further solidify its position as a leading asset in the cryptocurrency space. The introduction of the ETF is expected to drive increased institutional interest and broader adoption.
Written by Alexandar Artis
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