ETH Erases PreETF Approval Gains Pondering the Future of Ethereum

Crypto News reports:
Despite ETH experiencing a larger decline compared to BTC by mid-July, the “anticipated” ETF failed to act as a catalyst. Analysts have varying opinions on how the market will react to an ETH ETF amidst the negative sentiment.
Despite the potential launch of an ETF for Ethereum (ETH) in mid-July, it has not been immune to the ongoing market downturn.
Since July 1, the second-largest digital asset has dropped over $500, falling from a peak of $3.4 million to a low of $2.8 million, wiping out all gains made post some ETF approvals in May.
Nevertheless, Ethereum educator Sassal claimed that apart from potential outflows in Grayscale’s ETH trust ETHE, there are “no bearish” factors at play.
“Since the ETF approval on May 23, the entire setup has retraced… in my opinion, the primary concern for ETH at the moment is potential grayscale-like ETH outflows.”
He further added, “there are fundamental reasons for future bearishness,” citing increasingly clear regulations and the prospect of a Fed rate cut later in 2024 as potential headwinds.
ETH Suffers Larger Decline Than BTC
Despite Sassal’s optimism, the recent sell-off has hit ETH harder than BTC. On a weekly basis, as of the time of writing, Bitcoin dropped by approximately 11%, while Ethereum fell by 14%.
Given the expected launch of the ETH ETF in two weeks, this disproportionate decline is unprecedented, leaving some traders perplexed.
Some market observers claim that the sharp sell-off of ETH is due to a lack of a compelling narrative. Another user, Evans, stated that market risks, with potential outflows in ETH, could dampen expectations for the ETH ETF.
“Everyone is concerned about grayscale unlocking (more impactful in the low trading volume summer). The market is in risk-off mode, with everyone expecting little to no demand for ETH.”
Meanwhile, ETH retracement touched the golden zone, reaching the 61.8% Fibonacci retracement level based on the lows and highs of 2024.
The 61.8% Fib level ($28,000), acting as a daily order block (marked in aqua), has doubled up as a key support throughout the first half of 2024. The sustainability of this support may hinge on Bitcoin’s next moves.
Furthermore, negative outflows in the derivatives market emphasize the risk-averse approach of investors.
According to Coinglass data, there has been a total outflow of $4.5 billion in ETH since July 1, highlighting bearish sentiment and lukewarm anticipation for the ETF launch.
However, a recent Bloomberg article indicates that only if the Fed turns dovish and offers “one or two rate cuts,” could sentiment improve in the cryptocurrency market.