Since the launch of the Spot Ethereum ETFs, the price of Ethereum has unexpectedly struggled, with a decline of approximately 10% in value. This surprising turn of events has left investors puzzled as they anticipated a positive impact following the introduction of the ETFs.
An analysis from Matrixport has shed light on the factors contributing to the decline in Ethereum price post-Spot ETF launch. One of the major reasons cited is the outflows from the Grayscale Ethereum fund, which saw a whopping $481 million exiting the fund on the first day alone. This trend continued with $326 million leaving the fund the following day. The high management fees of the Grayscale ETH fund, in comparison to competitors offering lower rates, have likely driven investors to other options.
Another factor adding to the selling pressure on Ethereum post-Spot ETF launch is the distribution of Mt. Gox funds around the same time. This has exacerbated the decline in price, paralleling the impact seen on Bitcoin price after the launch of Spot Bitcoin ETFs. The combined effect of outflows from the Grayscale fund and Mt. Gox distributions has contributed significantly to the downward trend in Ethereum price.
Markus Thielen, Head of Research at Matrixport, has suggested that the Ethereum price may have reached its peak. Using the daily stochastics indicator as a guide, Thielen points out that a score above 90% indicates overbought territory for the cryptocurrency. With Ethereum scoring 92% in the days leading up to the Spot Ethereum ETFs launch, it was poised for a potential decline. The current 5% drop from 92% to 87% further supports the notion that the price of Ethereum may continue to decrease.
Considering the recent rally, potential overhang from Mt. Gox, the US earnings season, and weak seasonal trends for August and September, Thielen advises caution when dealing with Ethereum investments. It may be prudent to extend short positions on Ethereum, given the current market conditions and the indicators suggesting further price declines.
The launch of Spot Ethereum ETFs has not had the desired positive impact on the price of Ethereum. Instead, it has led to unexpected struggles and decline in value, driven by outflows from the Grayscale fund, Mt. Gox distributions, and indications of a potential peak in Ethereum price. Investors are advised to tread carefully in the current market environment, keeping in mind the various factors influencing the price of Ethereum.
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