Nine spot Ethereum exchange-traded funds launched on Tuesday after months of waiting.
Many industry watchers expected it to trigger a new crypto rally.
However, Bitcoin has drifted almost 1.1% while Ether has plunged 8.2% over the past week, according to CoinGecko data.
“If this trend continues, crypto will need more help to rally,” 10x Research said in an investor note on Thursday. “Ethereum might be the weakest link, where fundamentals (new users, revenues, etc.) have been stagnant or lower.”
So why have the cryptocurrencies tumbled, and where will they go from here?
Big tech disappoints
A big reason why Bitcoin and Ether have dropped is due to the tech industry, 10x Research wrote.
The benchmark S&P 500 index suffered its worst day since December 2022, while the tech-heavy Nasdaq posted its steepest drop since October 2022 after disappointing earnings from Google and Tesla.
“The US tech earnings season is off to a poor start,” 10x Research wrote. “Expectations are likely too high, and guidance will be more conservative as consumer spending takes a hit.”
Sell the news
The weeks that led up to the spot Ethereum ETF launch saw the prices of Bitcoin and Ether balloon 25% and 24%, respectively.
This set the stage for a so-called “sell-the-news” profit-taking opportunity, 10x Research said.
A similar event occurred in January when 10 spot Bitcoin ETFs were launched, which served as a preamble to the Bitcoin price’s record high in March.
Mt. Gox
Mt. Gox repayments also weigh on prices.
The crypto exchange collapsed in 2014. Since then, its creditors have waited to get roughly $9 billion in Bitcoin back.
That wait is now over. The entity that handles the bankruptcy has started to repay the assets.
If creditors immediately sell their assets to cash in, that means more supply will hit the market, which translates to lower prices.
Brad Howell, managing director of crypto market maker Keyrock UK, has said that the impact of Mt. Gox on the market will be heavily influenced by sentiment, not actual market dynamics.
$15 billion
That said, other experts say another crypto rally is coming.
The nine spot Ethereum ETFs bagged $107 million in total inflows on their first day of trading – a “great setup for the road ahead,” Juan Leon, senior investment strategist at crypto index fund manager Bitwise, posted on X.
The second day of trading wasn’t as euphoric.
The nine funds saw $133 million in outflows on Wednesday, according to data from SosoValue.
Was unable to monitor action today but looks like the Eth ETFs (eg $ETHA below) did about as much or even a little more volume than yesterday.. That's good sign as a lot of times there's a sizable dropoff after hyped-up Day One pic.twitter.com/h23FLo5rZ1
— Eric Balchunas (@EricBalchunas) July 24, 2024
Still, Ethereum ETFs could take in $15 billion in assets within the next 18 months, Bitwise chief investment officer Matt Hougan argued in a June blog post.
Crypto market movers
Bitcoin is down 3.7% over the past 24 hours to trade at $64,008.
Ethereum is down 8.9% and trade at $3,160.
What we’re reading
Crypto struggles with sexism just as the industry becomes an election issue — DL News.
Bitcoin Is Digital Gold, What’s Ethereum? — Milk Road
ETH Drops Under $3,200 as Spot Ether ETFs Record $133 Million Outflows — Unchained.
Ether slides below $3200 amid broad crypto market pullback — The Block.
How crypto is funding a flood of election disinformation online — DL News
Eric Johansson is DL News’ News Editor. Got a tip? Email at eric@dlnews.com.
