Coin Realm reports:
Despite the possibility of Ethereum (ETH) launching an ETF in mid-July, it has not been spared from the ongoing market crash. Since July 1st, the second-largest digital asset has fallen over $500, plummeting from $3,400 to a low of $2,800, erasing all gains acquired since the partial ETF approval in May. Ethereum educator Sassal stated that aside from potential capital outflows from Grayscale’s ETH trust ETHE, there are no other apparent “bearish” factors. “Since the ETF approval on May 23rd, the entire upward momentum has receded… I believe the main issue ETH currently faces is the potential capital outflow from Grayscale ETHE,” he said. Although Sassal remains optimistic, the recent plunge has had a more significant impact on ETH than on BTC. To date, BTC has fallen about 11% weekly, while ETH has dropped 14%. He further noted, “There are fundamental reasons for a bearish future,” and predicted that increased regulatory transparency and potential Federal Reserve rate cuts in the second half of 2024 could positively impact the market.
Considering the ETH ETF is expected to launch in two weeks, this disproportionate decline is unprecedented and has left some traders perplexed. Some market observers claim that ETH’s plunge is due to a lack of a strong narrative. On the other hand, Evans believes the market is currently in a risk-averse state, anticipating that potential capital outflows from the Grayscale ETH trust could weaken the appeal of the ETH ETF. “Everyone is concerned about the impact of Grayscale’s unlocking on the market, especially during the summer when trading volumes are lower. The overall risk-averse sentiment in the market has led to a general decrease in demand for ETH.” Meanwhile, based on the low and high points of 2024, ETH’s retracement has precisely reached the 61.8% Fibonacci retracement level, a golden zone often considered an important support position where prices may rebound.
The 61.8% Fibonacci level ($28,000) is not only twice the daily order block (marked in teal) but also an important support level for the first half of 2024. Whether this support can hold may depend on the future trajectory of Bitcoin (BTC). However, negative outflows in the derivatives market further highlight investors’ risk-averse attitude. According to Coinglass data, since July 1st, ETH’s net outflow has reached $4.5 billion, reflecting the market’s bearish sentiment and the lukewarm response to the upcoming ETF launch.
However, Bloomberg’s latest report indicates that only if the Federal Reserve shifts to a dovish policy and implements “one or two rate cuts” will it be possible to improve the sentiment in the crypto market.