Coins World reported:
Despite the fact that by mid-July, the decline in ETH was greater than that of BTC, and despite the “expected” ETF being a catalyst. In the negative sentiment, analysts have different views on how the market will receive the ETH ETF.
Despite the possibility of an ETF for Ethereum (ETH) being launched in mid-July, it has not been spared from the ongoing market slump.
Since July 1, the second largest digital asset has fallen by over $500, dropping from $3.4 million to a low of $2.8 million, offsetting all gains made after the partial ETF approval in May.
However, Ethereum educator Sassal claimed that apart from potential outflows from Grayscale’s ETH Trust ETHE, there are “no bearish” factors.
“The entire operation has fallen since the ETF was approved on May 23… In my opinion, the main issue for ETH right now is the potential grayscale ETH outflows.”
He added, “There are fundamental reasons for future bearishness,” listing the increasingly clear regulations and the possibility of the Fed lowering interest rates later in 2024 as potential headwinds.
ETH’s decline is greater than BTC’s
Despite Sassal’s optimistic view, the recent sell-off has hit ETH harder than BTC. As of the time of writing, Bitcoin has fallen by about 11% on a weekly basis, while Ethereum has dropped by 14%.
Given the disproportionate decline, two weeks before the expected launch of the ETH ETF, some traders are puzzled.
Some market observers claim that the hard sell-off of ETH is due to a lack of a strong narrative. Another user, Evans, stated that there is a risk in the market, and potential ETH outflows could lower expectations for the ETH ETF.
“Everyone is worried about grayscale unlocking (more influential in the low trading volume summer). The market is in a risk-off state, with everyone expecting little to no demand for ETH.”
At the same time, the pullback of ETH touched the golden zone, reaching the 61.8% Fibonacci retracement level based on the low and high points of 2024.
The 61.8% Fib level ($28,000) doubled as a daily order block (marked in blue) and has been a key support in the first half of 2024. Whether the support is maintained may depend on the next move of Bitcoin.
However, the negative outflow in the derivatives market further underscores investors’ risk-averse approach.
According to Coinglass data, since July 1, ETH has seen a total net outflow of $4.5 billion, highlighting the bearish sentiment and potential tepidness for the ETF launch.
However, a recent report by Bloomberg pointed out that only if the Fed turns dovish and provides “one or two rate cuts”, the sentiment in the cryptocurrency market could improve.
