Key Takeaways:
On their second day of trading, the eight newly launched spot Ethereum exchange-traded funds (ETFs) experienced a net inflow of $193.69 million. However, the massive selling pressure caused by investors moving funds out of the Grayscale Ethereum Trust (ETHE) resulted in a net outflow of $133.16 million on Wednesday.
Outflows from ETHE swallowed all the gains made by the spot Ethereum ETFs, bringing their total net outflow to $26.38 million. The total trading volume of the funds on Wednesday stood at $1.05 billion.
Ethereum Declines By 7% Due To Massive Outflows From The Grayscale Ethereum Trust (ETHE) ETF
Ethereum’s price is down more than 7% in the past 24 hours, dipping below the closely watched $3,500 mark. ETH has been fluctuating ever since the debut of the spot Ethereum ETFs on Tuesday.
The world’s second-largest cryptocurrency by market capitalization also sustained $124.78 million worth of liquidations over the day. This is 25% more than the liquidations on BTC.
Futures traders are expecting a larger price drop for ETH following the listing of Ether ETFs. $117.81 million worth of long positions and $7 million in Ethereum short positions were liquidated during the same time.
Ether’s price is following the same pattern as BTC when it dropped about 15% following the launch of the spot Bitcoin ETFs before rebounding. Since posting a monthly high of $3,562 in the past week, ETH has fallen by 11%.
It is the intense outflow from Grayscale’s ETHE fund that has triggered Ethereum’s latest price decline. Unlike in the case of Grayscale’s GBTC, which traded at a discount at launch, ETHE is trading at net asset value, which puts more pressure on ETH’s price.
Bitcoin managed to quickly recover from its post-ETF launch decline and surged by 92% in the two months after GBTC outflows diminished. Grayscale still holds 2.48 million ETH worth about $7.9 billion in assets under management (AUM).
Crypto Analysts Predict “Tremendous” Price Action For ETH Similar To BTC Following ETF Launch
Prominent crypto analyst Michael van de Poppe explained in a note on Tuesday that Ether was going to experience “tremendous” price action from the ETF inflows, similar to what happened with Bitcoin when its price skyrocketed from $40,000 to $70,000 following the launch of the spot BTC ETFs.
He doesn’t rule out ETH doubling its price soon. Van de Poppe suspects that a price rally from $3,500 to $7,500 “is on the cards” for Ethereum. However, he anticipates a downward momentum for a couple of weeks before the cryptocurrency surges toward a new all-time high.
Lead market analyst for Swftx, Pav Hundal, said in an interview with crypto news outlet Cointelegraph that a “nearer-term goal” for Ether is to target the all-time high of $4,890 from November 2021.
Meanwhile, traders suggest that Ethereum’s price fall to the $3,200 range has put the cryptocurrency in a “buy” territory but warn that the sentiment may not last long as the “tremendous” impact of the exchange-traded funds comes into effect.
Pseudonymous crypto trader ‘Sheldon The Sniper’ highlighted in an X post on Wednesday that $3,300 and below are the current buy zone for ETH, and that the $3,097 buy zone had already passed.
He also predicted that Ethereum could reach $4,000 over the next week or two, reiterating the two entry points as the ones investors can ride to the next all-time high breaks.
ETH broke its key support range of $3,205 and is now trading within the $2,852 to $3,357 range. This is where the token traded for more than a month between April 12th and May 19th.
At the time of writing, Ether (ETH) is trading at $3,268 – up 3.05% over the last 24 hours.
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