Ethereum's price continues to underperform relative to meme coins, despite the recent launch of Ethereum ETFs. Layer 2 networks have had the worst performance among all sectors.
Post-ETF Launch Struggles
Three days after the launch of Ethereum ETFs, the price of Ethereum remains under pressure, while meme coins have seen exponential gains year-to-date (YTD). Analysis of the ETFs reveals poor inflows, with BlackRock’s ETHA product attracting only $17.2 million on the first trading day. In contrast, Grayscale has experienced significant outflows, resulting in a cumulative net ETF outflow of $29.2 million by the end of the second trading day. Despite a 2.6% increase in Ethereum’s price to $3,247, this gain is overshadowed by Bitcoin's climb back to $67,000.
ETF Anticipation Fails to Boost Ethereum Price
The launch of Ethereum ETFs on July 23 saw a total trading volume of $1.11 billion on the first day, with cumulative inflows of $107 million. However, these inflows turned negative the following day. By comparison, the first day of Bitcoin ETF trading saw a total volume of about $4.6 billion. The approval of Ethereum ETFs is a significant milestone in the crypto industry, especially since there have never been two crypto ETFs before. This development has sparked speculation about the introduction of additional ETFs, such as a potential Solana ETF, as VanEck and 21Shares have filed 19-4bs.
Despite the significance of this news, the price of Ethereum has declined, reflecting the broader market outlook.
Meme Coins Outshine the Ethereum Ecosystem YTD
Meme coins such as Bonk (BONK), Dogwifhat (WIF), and Pepe (PEPE) have outperformed other sectors within the Ethereum ecosystem year-to-date, according to Boutique Digital Asset Research. Layer 2 networks, on the other hand, have shown the worst performance among the analyzed sectors. However, all sectors, including meme coins, have underperformed Bitcoin on a relative and risk-adjusted basis.
Correlation analysis indicates that ETH Betas are positively correlated with Ethereum, with Arbitrum (ARB), Optimism (OP), and Synthetix (SNX) showing the highest correlations. Throughout the bull run that began in June 2023 following BlackRock’s Bitcoin ETF announcement, meme coins have remained a consistent performer. While Ethereum has traditionally been the primary platform for meme coins, its competitor Solana has gained ground, hosting multiple meme coins with billion-dollar market caps. This shift is likely why Boutique Digital Asset Research found that investing in Solana (SOL) year-to-date has provided better risk-adjusted returns.
Technical Analysis: Ethereum Price Eyes $2,800 as Bitcoin Recovers
The current trend in the ETH/BTC chart is predominantly downward, characterized by lower highs and lower lows. Recent candles indicate a sharp decline followed by a slight recovery, suggesting a potential reversal or consolidation phase after a strong downtrend.
Ethereum's price action is trending below the 50-day and 200-day exponential moving averages (EMA), signaling a continued downtrend. The Ethereum price forecast suggests that the asset is likely to continue dropping against Bitcoin until it reaches the next major support level around 0.0447 BTC. Conversely, the EMAs provide resistance around 0.05336 BTC and 0.05276 BTC.
In the ETH/USD market, the price reached the 200 EMA at $3,125 before rebounding. The 50 EMA, currently at $3,360, acts as immediate resistance and may push the price downward.
In summary, despite the significant milestone of Ethereum ETF launches, Ethereum's price struggles to gain momentum, with meme coins and other sectors showing stronger performance year-to-date. The market remains cautious, with technical indicators pointing towards further potential declines.
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