Ethereum ETF approved, why did the market fall instead of rise?
Ethereum ETF approved, why aren’t Ethereum ecosystem’s copycats rising?
Ethereum ETF approved, why is it that only the meme is rising?
1. Ethereum ETF was approved, why did the market fall instead of rise?
Strictly speaking, the approval of the Ethereum ETF only passed the 19b-4 document, which is the industry code of conduct in the words of Mr. Ni. Although the approval of this document represents the recognition of Ethereum, another core document S-1 is still required to issue an ETF. Although VanEck submitted the S-1 application as soon as 19b-4 was approved, it still takes a few days, dozens or even hundreds of days to pass the S-1.
Theoretically, although the most critical industry standards for Ethereum ETF have been passed, there is still expectation for speculation afterwards. However, before another expected hot spot speculation or clear review rules are announced, the market needs a "resting period". After all, the current entire crypto market environment is in a state of "exhaustion" due to the deterioration of the US macroeconomic situation.
At present, the crypto market is still in a situation where it has temporarily lost its subjective "grand narrative" hotspot, so a short-term decline after the rise is normal. Of course, once the S-1 document review cycle is disclosed, the market hotspot will slowly be ignited again.
At the same time, the ETF is not listed, and the OTC market cannot bring actual buying volume like the Bitcoin ETF. At the same time, even if the Ethereum ETF is successfully listed, the market will still face the situation of long-short game, just like the Grayscale selling pressure after the Bitcoin ETF was approved, which is a normal way for retail investors to change their positions. Whether it will happen this time depends on whether Grayscale will reduce management fees.
2. Ethereum ETF has been approved, why don’t the Ethereum ecosystem’s copycats rise?
Similar to the first point, Ethereum's ETF has not yet been substantially listed, and Ethereum itself has not brought in substantial over-the-counter buying. Although it is only a matter of time before Ethereum's ETF is listed, this expectation is not enough for a copycat.
I see the approval of Bitcoin and Ethereum ETFs as a process of changing from decentralization to pseudo-centralization, which is a macro narrative of the current and future crypto markets. Some of the copycat tokens may join this team in the future, but only a few will be able to join. Those who cannot join are in an awkward situation.
Although it does not involve ETF attributes, whether it will be restricted by future encryption regulations issued by the United States is enough to make more people imagine. Secondly, the core of driving the market is that after the hot spots attract a large amount of funds, the funds themselves are limited and overflow, so it will bring about the effect of rising tides, that is, driving the entire market up.
At present, the macroeconomic and financial environment is not optimistic enough. Simply put, there is a lack of money. The liquidity of the US dollar is also concentrated in the stock markets of various countries, and the liquidity of the crypto market is relatively small. Secondly, the funds flowing into the crypto market are diverted, just like Bitcoin. Now you can buy spot or ETF, and the funds are diverted by ETF. The funds flowing into the spot are more single-anchored to Bitcoin or Ethereum due to the influence of ETFs. It is difficult for funds to overflow in the short term, so naturally the cottage cannot get sufficient funds and rise. Those that can rise are either AI that fits the mainstream risk market narrative, or MEME, an emotional product.
3. Ethereum ETF was approved, why is it that only the meme is rising?
In fact, I gradually understand why Musk likes to shout out memes so much. In fact, for Musk, he is a big shot in the field of science and technology, so many blockchain technologies and concepts may not be such good "cakes" in Musk's eyes. When Musk sees through the essence of most of the current development of blockchain technology, he may think that it is better to directly shout out a wave of memes instead of watching you "perform". It is to engage in personality cult and emotional market. It is fun and can make money, because the leeks in the market always like to be guided by emotions.
I also think that this is the main reason for the rise of meme. With the continuous development of blockchain technology, the blockchain narrative in the market has become more and more complicated, from the original L1, to the L2 expansion, to the subsequent DeFI, etc. Today, these gameplays are outdated. In order to hype market expectations and narratives (painting cakes), more complex and obscure technologies and narratives have to be proposed to the market.
Leek said, this is hard to understand. Project owner: That’s right, it’s easy to understand, how do I lay the groundwork for my narrative? How do I hype it up?
Therefore, various project parties come and go, bringing all kinds of "emerging" technologies and giving birth to various project investment research reports. But to be honest, even for me, not to mention retail investors, it is sometimes really difficult to understand the meaning of various new concepts and projects. Let alone retail investors, so in the eyes of retail investors, various investment research reports may be no different from hieroglyphics, which they cannot understand and are too lazy to read. They just invest based on popularity.
But retail investors have invested too much and lost too much, and then they find that it is difficult for us to make money despite your exaggerations (of course, this also includes the factors of the big market). So why don’t I just buy local stocks instead of listening to your empty promises? And the evolution from local stocks to MEMEs is basically like this. The essence of memes is to speculate on emotions, the future, and expectations, not any technical narratives. It is simpler, more direct, and more violent for retail investors. This is also the reason why memes can come into being.
After the key documents of Ethereum ETF were passed, the meme continued to rise, indicating that retail investors still do not fully understand ETFs, or after experiencing Bitcoin ETF, people’s expectations for Ethereum ETF have lowered, and their expectations for the current mainstream narrative have lowered, which leads to the outcome that it is better to speculate on memes than to have funds.
When the market is confused and when retail investors are confused, the simpler, more straightforward, more violent, and more likely to make money in the short term will burst out with amazing power.
Conclusion:
In the future, the mainstream narrative of the market will still be the review of Ethereum's ETF follow-up document S-1 and the listing time of the ETF. As for how high the ETF can rise after or before it is officially listed, it is not enough to just look at the ETF narrative itself, but also combine it with the macroeconomic environment. The macroeconomic environment is not good and the market is too cold.
However, although the approval of the ETF cannot directly make Ethereum increase several times, it can provide a bottom line for Ethereum. You can refer to the Bitcoin ETF. There is an increase after it is approved, but it is far less than the hype before it was approved. However, in the downward trend, the "bottom" of Bitcoin has been raised and the bottom has become more stable. This is actually the best benefit for Ethereum.
I will continue to pay attention to the subsequent S-1 documents of the Ethereum ETF and update you as soon as there is news.
