The market has not been very active on the day that the much-anticipated spot Ethereum (ETH) Exchange-Traded Fund (ETF) launches in the United States. According to analysts from Singapore-based QCP Capital, this lackluster response is due to a mix of past market behavior and changes in the overall market.
According to QCP Capital’s most recent investor note, the market is following a trend of “buy the hype, sell the news.” This is similar to what was seen with the US spot Bitcoin ETF earlier this year. When Bitcoin launched on January 11, prices went through the roof as people waited for it to become available. However, they quickly dropped to $38,000, a 21% drop in just 12 days.
Ethereum ETF’s Market Impact
This drop was mostly caused by investors pulling the funds out of the Grayscale Bitcoin ETF, which changed from the GBTC Trust and let investors sell their shares for the first time in years. Things could be going the same way for Ethereum, though there will be some changes because of Grayscale’s “Mini ETF.”
Even though it went down at first, Bitcoin finally hit new all-time highs less than two months after its ETF launch. QCP Capital says that buyers are being cautious right now and may be waiting for more information to come out before making significant purchases in the ETH market.
A substantial role is also played by how the market feels in general, which is heavily affected by changes in the price of Bitcoin. The recent substantial Bitcoin transfers by the US government and Mt. Gox have made the cryptocurrency market shake.
The US government sent 58,742 Bitcoin to Coinbase this morning. They currently hold 213,239 Bitcoin, which is worth about $14.2 billion. At the same time, Mt. Gox sent about 47,600 BTC to different wallets, including $5,110 BTC (worth $340.1 million) to Bitstamp. It’s possible that these substantial transactions are making the market more careful.
Ethereum’s spot prices have stayed the same, but there has been a lot of movement on the options market. QCP saw an 8-vol rise in July’s volatility, and the risk reversal (RR) dropped by 3 vols, which means people are being more cautious about possible downward moves.
The fact that the live market and the options market are not moving in the same direction suggests that traders may be getting ready for more price drops soon.
QCP comes to the conclusion that Ethereum prices may stay low in the short term. They point out that the US Government and Mt. Gox may be putting pressure on people to sell. For its part, the company says that the ETH Spot ETF has not fully changed the market yet. At the moment, ETH is worth $3,513, which is 0.5% more than it was 24 hours ago.
