Ethereum Price Stays Flat Despite Today’s ETF Debut: QCP Explains Why
23 Juli 2024 - 6:30PM
NEWSBTC
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
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