Why is the price of ETH dropping despite launching Ethereum ETF?
ETH’s price has surprisingly been struggling since the Spot Ethereum ETFs’ debut, suggesting that it was a ‘sell the news’ event. Matrixport believes that this second-largest crypto by market cap has depreciated by about 10% ever since Spot Ethereum ETFs started trading on July 23rd Tuesday and could still collapse even further.
Spot Ethereum ETFs Sell
The market was excited after the launch of Spot Ethereum ETFs as investors could suddenly gain exposure to ETH without actually buying the coin. The Etherium price falls days after its introduction; thus dampening this enthusiasm.
In a Thursday report, Markus Thielen, Head of Research at Matrixport explained why ETH was falling. According to Thielen, Grayscale Ethereum fund had withdrawals but inflows hit $100m on day one.
Similar to when Spot Bitcoin ETFs debuted, there were outflows from the $9bn Grayscale ETH fund. Grayscale fees for management are high relative to rivals’ 0.19%. In its first day alone, the fund dropped by $481m while another $326m followed suit.
Mt Gox dividends also began around the same time as Spot Ethereum ETFs release hence adding to crypto market selling pressure. This has seen ETH go below $4,200 through these withdrawals similar to what happened with Bitcoin during its debut throguh their own Bitcoin exchange traded funds (ETF).
Is there going to be an ETH recovery?
Outflows from Grayscale Ethereums have helped in making Eth prices fall since Spot ETFS were launched. Nevertheless, this is not only a disservice for this cryptocurrency.
Thielen thinks that the daily stochastics signals suggest that ETH is topping out. When this indication is low it normally indicates a purchase opportunity and a cheap price usually accompanies it. For example, while value is high it may be said that ETH has reached its ceiling.
A research said that ETH touched 92% just before the Spot ETH ETFs debut. Usually, when a score is above 90%, it means that the cryptocurrency has been overbought.
