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In a day marked by the launch of the long-anticipated spot Ethereum (ETH) Exchange-Traded Fund (ETF) in the United States, the market’s response has been unexpectedly subdued. Analysts from Singapore-based crypto asset trading firm QCP Capital have shed light on the reasons behind this muted reaction, blaming the situation on previous market behaviors and other news from the broader market. Why The Ethereum Price Is Not Skyrocketing In their investor note, QCP Capital points out that the market may be adhering to a “buy the hype, sell the news” pattern, similar to the US spot Bitcoin ETF launch scenario. When the spot Bitcoin ETF debuted on January 11 this year, Bitcoin prices surged prior to the launch but later fell to $38,000, recording a -21% drawdown in the first 12 days after the launch. This price action was mainly driven by the outflows from the Grayscale Bitcoin ETF, which converted from the GBTC Trust and opened the possibility for investors to withdraw their holdings for the first time in years. A similar scenario could be looming for ETH, although there’s a key difference with Grayscale’s launch of the “Mini ETF.” To recall, Bitcoin subsequently reached new all-time highs within two months. So, QCP suggests that investors are being cautious and waiting for further developments before making any major moves in the ETH market. Related Reading: US Spot Ethereum ETFs Poised To Draw $1.2 Billion Monthly: Research Firm In addition, general market sentiment, which is heavily influenced by Bitcoin movements, could also play a crucial role. In particular, the transfers of Bitcoin by the US government and Mt. Gox have created a ripple effect that is impacting the dynamics of the crypto market as a whole. This morning, the US government transferred 58,742 BTC to Coinbase, while still holding 213,239 BTC worth approximately $14.2 billion. At the same time, Mt. Gox moved around 47,600 BTC to various wallets, including 5,110 BTC (340.1 million dollars) to Bitstamp. These large-scale movements may contribute to the market’s cautious stance. While spot prices for Ethereum remain flat, the options market is exhibiting notable activity. QCP observed that 26 July volatility made an impressive 8-vol rally, with the risk reversal (RR) dipping by 3 vols. This signals an increased caution towards potential downside movements. The divergence between the spot and options markets indicates that traders might be preparing for further price drops in the near term. Related Reading: Ethereum Retraces: Here’s Why ETH Bulls Must Decisively Break Above $3,500 “The options market seems to be expecting more downside movement in the near term, exacerbated by the US Government and Mt Gox news,” QCP commented. Given the current conditions, QCP Capital suggests that Ethereum prices may remain subdued in the short term. The firm highlights potential BTC selling pressures from the US Government and Mt Gox as key factors that could indirectly keep ETH prices from rising. Additionally, with the ETH Spot ETF’s impact not yet reflected in the market, traders might be waiting for more momentum to build up, possibly in the lead-up to the US elections. QCP’s investor note concludes, “With the ETH Spot ETF potentially not impacting prices on the outset, coupled with potential selling pressure from the US Government and Mt Gox, prices may remain subdued until momentum builds up leading to the elections.” At press time, ETH traded at $3,513, up 0.5% over the past 24 hours. Featured image created with DALL·E, chart from TradingView.com