Ten years ago, on July 22, 2014, Ethereum raised 31,529 bitcoins through its initial coin offering (ICO), which was worth more than $18 million at the time. Today, the U.S. Securities and Exchange Commission (SEC) has approved multiple Ethereum spot ETF applications, marking another milestone for this important crypto asset in the financial market. This event not only reflects the journey of Ethereum from its inception to maturity, but also demonstrates the continuous progress of crypto asset innovation and regulatory environment.
Ethereum’s Market Appeal
Ethereum is known for its strong practicality and wide application, especially in the field of decentralized applications (dApps) and smart contracts. Unlike Bitcoin, Ethereum is not only a digital currency, but also a global computing platform. Therefore, the approval of the Ethereum spot ETF has far-reaching implications for the entire cryptocurrency ecosystem.
Market expectations and fund flows of ETFs
Although the approval of the Ethereum spot ETF is an important milestone, the expected capital inflow may be less than that of the Bitcoin ETF. This is mainly because Bitcoin has a higher level of attention in the market and a larger market size. It is expected that in the next year, the Ethereum ETF may attract about $4 billion in capital inflows.
However, as funds flow in, the market may also face selling pressure. Grayscale's Ethereum Trust (ETHE) no longer trades at a discount to its net asset value (NAV) as early as the beginning of this month. Over the past three years, ETHE has always traded at a discount of 6% to 26% due to the inability of the trust to redeem, and buyers can only buy and sell on over-the-counter exchanges. As the ETF approaches, buyers began to rush to buy discounted ETHE, which also pushed the price of ETH to break through $3,400 before passing.
Grayscale Trust’s capital flow impact
Grayscale's ETHE currently manages more than $11 billion in assets. If the Ethereum ETF experiences similar outflows as the Bitcoin ETF, an average of $110 million in outflows are expected every day. Grayscale has already transferred Ethereum assets to Coinbase to prepare for subsequent sell-offs. This will put pressure on ETH in the short term, but most of the outflows may be absorbed by other institutions.
In the past 24 hours, the price of Ethereum has fallen by 7.84%.
preventive solution
Before the ETF was listed, we had already formulated a response plan and notified all members in the community. The following are our suggestions for position allocation after the Ethereum spot ETF is listed:
The first strategy
Sell 50% of your position (safe): This strategy retains a portion of your position, so you have room to maneuver whether the market is falling or rising. If the market trend is clear, you can continue to configure your position.
The second strategy
Clear all positions (conservative): The market is expected to rise first and then fall, but the fluctuation will be very rapid. Many investors may not be able to react in time, and they directly clear their positions to avoid risks and wait for the selling pressure to be absorbed by the market before re-entering the market.
The third strategy
Stay still (long-term holding): Suitable for long-term investors who have entered the market at a low average price or have a good mentality. However, recent market fluctuations have shown that many so-called long-term holders are actually unable to withstand continued declines.
Most members of the community chose the second strategy, which is conservative, direct and effective. The minority who chose the first strategy were mostly those who had hope for a rise in the market or were unwilling to sell all their positions. Almost no one chose the third strategy, because the market fluctuations in recent months have made people see their psychological tolerance in the face of declines.
So here comes the key point, what are the strategies and ideas for dealing with the current market conditions?
First, let’s look inward.
1: What is my overall profit and loss since I entered the circle?
2: Is the spot I currently hold worth holding for the long term? Do I have the confidence to hold it?
3: The long-term layout I made before the New Year has now fallen to this point. Can this circle still help me realize my dream?
4: Will the current profit and loss situation affect your life?
5: How many times can the existing funds be multiplied by the future market conditions?
Think carefully about the five questions above.
Then the current market situation
I can tell you clearly that it will continue to fall, and the Ethereum 3000 will at least break. Whether it can be repaired immediately depends on the market environment. But from this point, we can know that it is not suitable to buy at the bottom now. So we still need to deal with the existing positions, and the method is still to turn up. There are three strategies mentioned above.
At this stage, we are mainly waiting and watching. When Ethereum reaches 3050, we can take action first.
Those who walk alone go fast; those who walk together go far!
If you don’t know how to proceed and always don’t get first-hand information, you can follow me and I will take you to the front line of the battle.
