Written by: 10x Research
Compiled by: Azuma, Odaily Planet Daily
Six Ethereum spot ETF issuers have filed updated S-1 forms, meaning the U.S. Securities and Exchange Commission (SEC) could give final approval for the launch of Ethereum spot ETFs at any time. Meanwhile, cryptocurrencies appear to be on a rebound this week, a rebound we predicted in our report last weekend, driven by expectations of lower-than-expected U.S. CPI data to be released on Thursday.
Oversold indicators show that the market is looking forward to a possible small-scale rebound, which means that the market trend will reverse in the short term. At present, two of the three reversal indicators have shown bullish signals, and the RSI (Relative Strength Index) is temporarily reported at 38%, which means that the bears may also need to wait and see for the time being until the price of Bitcoin encounters resistance in the price range of $60,000 to $62,000, which will lead to another downward trend.
From a technical analysis perspective, the price range of $55,000 to $56,000 is forming a support level. However, considering that the medium-term technical pattern has deteriorated, we predict that this will only be a short-term rebound and will not last long. It is particularly important to note that the recent trend of Bitcoin falling during Asian trading hours and performing relatively well during European and American trading hours continues.
Despite a 20% drop in the price of Bitcoin over the past 30 days, Bitcoin futures traders have remained relatively bullish since May 20, when expectations for the approval of an Ethereum spot ETF increased. Since then, Bitcoin’s open interest has grown from 260,000 BTC to 305,000 BTC, temporarily reported at 277,000 BTC, but Bitcoin’s price has fallen from $66,000 to $57,000 over the same period; Ethereum is in a similar situation, with open interest increasing from 2.6 million ETH to 3.1 million ETH, despite the trading price remaining largely unchanged at around $3,068.
Since May 24, the negative net asset value (NAV) premium of the Grayscale Ethereum Trust has shrunk significantly to only -1.5%, which has narrowed significantly from the peak in December 2022 (-60%). Mainly due to the expectation that the Ethereum spot ETF will be approved soon. The Grayscale Ethereum Trust has approximately $9 billion in assets under management, and the ETN’s transition to an ETF means investors will be able to freely redeem their shares.
Grayscale’s redemptions could cause significant selling pressure once the Ethereum spot ETF starts trading, similar to what happened with Grayscale Bitcoin Trust (GBTC) in January 2024. Since the Bitcoin Spot ETF opened for trading, GBTC’s AUM has decreased by 47%. It is predicted that Grayscale’s capital outflows may offset the capital inflows of the other five ETF issuers.
Therefore, although the current price of ETH is still similar to when the SEC expressed its intention to approve it, there may still be a potential "good news is out" when the S-1 is approved. In the case of ETH, the open interest in the futures market shows a strong bullish attitude towards ETH, and potential Grayscale outflows may affect market trends again.
A similar pattern exists for Bitcoin, where inflows into spot ETFs precede CPI data releases. Bitcoin ETFs saw net inflows of $295 million on Monday, following $143 million in net inflows last week. This matches the 20 consecutive days of $4 billion in net inflows observed during the May and June CPI data releases, though it is important to note that Bitcoin ETFs saw net outflows of $1.2 billion after the June CPI data release.
The market expects the CPI data to be released on July 11 to drop to 3.1%, which is in line with our conjecture and the market's rebound expectations. If the core CPI can drop by 0.2% month-on-month, it is expected to still affect the price trend of Bitcoin. However, potential selling pressure from the German government, Mt.Gox and the upcoming Bitgo cannot be ignored.
The news that "FTX creditors may receive about $16 billion in compensation" has attracted widespread attention in the market recently. However, many of FTX's claims have actually been acquired by professional bankruptcy claims agencies, which only focus on the recovery expectations and arbitrage space of the claims themselves, and are unlikely to reinvest the received US dollars in the cryptocurrency market. We estimate that the scale of funds flowing back into the market may be between $3.2 billion and $5 billion. In addition, the price of Bitcoin was about $16,800 when FTX was liquidated in November 2022, and now it is $57,000. The current pullback is not an attractive discount for FTX's creditors.
The deadline for FTX customers to vote on the bankruptcy liquidation plan is August 16, and the relevant hearing will be held on October 7, when Judge Dorsey will consider whether to approve the plan. It is worth mentioning that overseas creditors may face a tax withholding of up to 30% when they finally pay out.
In summary, we expect that Bitcoin will likely rebound to around $60,000 first, and then fall to a low of around $50,000 again, after which the market will enter a relatively complex trading environment. By then, we expect the market to gradually digest the selling pressure from the German government and Mt.Gox from a psychological level, which will pave the way for some subsequent bullish events, such as the expected changes in FTX claims in mid-August and the potential impact of the upcoming US election on Bitcoin.
