Sokipiriye Dokubo
Ethereum (ETH) Struggles with Price Amid ETF Launch
After the debut of spot Ethereum ETFs in the U.S., the price of Ethereum (ETH) finds it challenging to surpass the $3,400 resistance level. Currently, ETH trades at $3,277 by the end of July, indicating a marginal 1% drop for the month despite the introduction of these new financial instruments.
Immediate Market Response
Following the initiation of U.S. spot Ethereum ETFs on July 23, the market witnessed a 9% decline. Presently, the price of ETH has fallen by 4.05% ever since the launch of these ETFs. This downward trend implies that factors other than the ETFs themselves are influencing the price performance of ETH.
ETHE vs. GBTC Outflows
An issue of significance is the outflow from Grayscale’s Ethereum Trust (ETHE). According to Sosovalue, the cumulative net inflow for all Ethereum ETFs is at a negative $439.64 million. The predominant selling pressure has been on Grayscale, while other prominent spot ETH ETFs like BlackRock, Bitwise, and Fidelity have reported positive daily inflows through July 29.
Lack of Exchange Demand
In addition to ETF-related concerns, exchange withdrawal transactions for Ethereum have notably decreased since March, indicating a lack of demand, as stated by independent analyst, Crypto Lion. The estimated leverage ratio (ELR) also plays a role in influencing ETH’s price during this volatile period, suggesting that futures and perpetual contracts are currently steering price movements.
Coinbase Premium Index Observations
Data from Coinbase corroborates the decreasing demand for ETH. The Coinbase premium index for ETH reached its peak in March alongside ETH’s annual high, but has been steadily declining through the second quarter of 2024 and is now in negative territory. The diminishing premium value indicates a lack of buying pressure from U.S. investors, resulting in reduced spot demand.
Wrapping Up
The launch of spot Ethereum ETFs has not yielded the expected rise in ETH demand. Ongoing outflows from Grayscale’s ETHE, coupled with diminished exchange demand and a declining Coinbase premium index, have collectively contributed to the subdued performance of ETH post-ETF introduction.