With the end of the German liquidation sell-off and the official start of Mt.Gox compensation, this article predicts that the last wave of large sell-offs will not be far away, but there is no need to worry too much. With the launch of the Ethereum ETF imminent, how will the Ethereum market develop?
Germany liquidates its stocks, Mt.Gox pays out more than half of its losses, and the last wave of panic is coming
Germany is more like a "large outsider". It has no special obsession or belief in Bitcoin. For such confiscated property, its value may have been an excess return, so it stepped up selling before the Mt. Gox compensation was completed. Unlike Germany, Mt. Gox’s compensation targets are mainly retail investors. It is unlikely that all of them will be sold at once. However, as Bitcoin rises, it is expected that there will be continued selling pressure, and the most significant selling pressure is expected to be the majority. When a person first receives Bitcoin. It is expected to appear from late July to early August; at the same time, the market is also performing the "five poverty, six absolute and seven turnaround" previously predicted.
Most of the compensation funds from Mt. Gox have been transferred, but it will take another 7-14 days for retail investors to receive them, which is in late July. Overall, the recent big selling pressure on Bitcoin is actually coming to an end.
Our analysis suggests that the impact of a potential sell-off on prices may be exaggerated. It is reasonable to assume that rational investors may find this an interesting opportunity created by irrational fear. Additionally, NYDIG data shows that publicly traded mining companies actually increased their Bitcoin holdings in June. While BTC sales have recovered slightly last month, they are still well below levels seen earlier this year and last year.
Ethereum ETF is just one step away from success, but huge selling pressure may cause it to suffer short-term setbacks
The Ethereum ETF is just one step away from going online, and it is likely to start trading next week. On July 16, the Wall Street Journal revealed that the U.S. Securities and Exchange Commission (SEC) told asset management companies that the spot Ethereum ETF may be launched on July 23. After the asset management company submitted the last round of filings this week, the U.S. Securities and Exchange Commission is expected to announce the effectiveness of the Ethereum ETF registration statement next Monday. Once the statement takes effect, the spot Ethereum ETF can begin trading.
Net inflows into a US spot Ethereum ETF could be only 30%-35% of those into a spot Bitcoin ETF. Furthermore, inflows and Ethereum’s return beta relative to inflows could be lower than the analysis suggests. While ETH could potentially offer diversification benefits in the long term, that is not the case currently. Investors who might buy a spot ETF (rather than the respective tokens) might view Bitcoin and Ethereum as similar enough to allocate their allocations to both cryptocurrencies rather than viewing them as different assets. This means Ethereum could see inflows specifically for a Bitcoin ETF rather than an additional allocation. Another reason for the less-than-expected inflows is the lack of staking services.
In addition to the possible lack of net inflows of Ethereum ETF, Grayscale's ETHE selling pressure has also become a major constraint for Ethereum to rise sharply in the short term. At present, Grayscale's Ethereum ETF is likely to pass, and it is expected that there will be a large outflow in the early stage of the Ethereum ETF, which will hedge the inflow of funds for the Ethereum ETF. In addition, the Ethereum Foundation is also selling, and the market is also overshadowed. According to Spot On Chain's data monitoring on July 17, in the past two days, two Ethereum Foundation/ICO-related wallets deposited 3,631 ETH (worth approximately US$12.5 million) into Kraken. Among them, 2,631 ETH (worth approximately US$9.01 million) were deposited in the address starting with 0xdb3, and 1,000 ETH (worth approximately US$3.46 million) were deposited in the address starting with 0xbf5.
Pectra upgrade is coming, Ethereum’s best time may start from October
In March 2024, Ethereum upgraded to Dencun, which significantly reduced the L2 transaction costs. Its impact on the entire Ethereum ecosystem is huge. Ethereum's next major upgrade, Pectra, has also attracted market attention and may be more important than Dencun. According to official Ethereum news, Pectra is scheduled to be launched in the fourth quarter of 2024 or the first quarter of 2025. If the launch of the Ethereum ETF opened the door for Ethereum to enter the traditional financial market, then the upgrade of Pectra will truly begin to attract traditional financial capital into Ethereum, thereby boosting the rapid growth of Ethereum's value.
After this upgrade, regular Ethereum accounts will be more programmable, L2 will be more affordable, smart contracts will be more efficient, and validators will be more flexibly managed. This will enable the Ethereum ecosystem to meet a wider range of use cases and user needs, and is expected to give birth to truly disruptive applications, which will also enable Ethereum to drive value growth through technology.
Conclusion
Overall, the German selling pressure has ended, Mt.Gox has paid more than half of its compensation, and the compensation funds have begun to be distributed to retail investors. The last major selling pressure is expected to come in late July. Large-scale selling pressure from retail investors will not continue to appear. Therefore, this article believes that Bitcoin will continue to strengthen in a bullish pattern overall. It is worth noting that Bitcoin has become a hot topic in the US election. Trump has clearly expressed his support, which will attract a lot of traffic to Bitcoin, thereby pushing up Bitcoin. In addition, the Federal Reserve has a dovish view on the macro level. The market expects the Federal Reserve to cut interest rates in September, which will also provide a favorable macro environment for Bitcoin.
The rise of Bitcoin is also a positive for Ethereum, but with the approval of the Ethereum ETF, Grayscale's ETHE is expected to see short-term profit-taking selling pressure. In addition, the amount of institutional funds flowing into Ethereum before October was relatively limited, which had a relatively limited impact on the rise of Ethereum. With the end of the US election and the upcoming Pectra upgrade, Ethereum's technical strength will attract more and more institutional investors, and its capital inflow will also increase significantly. Ethereum is expected to gradually explode in the fourth quarter.
