CoinBureau reports:
Despite the potential mid-July launch of an ETF for Ethereum (ETH), it has not been immune to the ongoing market downturn. Since July 1st, the second-largest digital asset has dropped over $500, plummeting from $3400 to a low of $2800, wiping out gains accrued since some ETF approvals in May.
According to Ethereum educator Sassal, apart from potential outflows from Grayscale’s ETH Trust (ETHE), there are no other significant bearish factors apparent. “The upward momentum has receded since ETF approvals on May 23rd… I believe the primary concern for ETH currently lies in potential outflows from Grayscale ETHE.”
While Sassal maintains optimism, the recent plunge has disproportionately affected ETH compared to BTC. As of now, BTC has seen a weekly drop of approximately 11%, whereas ETH has fallen by 14%. He further notes “existential reasons for a bearish future,” predicting favorable market impacts from increased regulatory transparency and potential Fed rate cuts in the latter half of 2024.
Given the anticipated ETH ETF launch in two weeks, this unprecedented steep decline has left some traders perplexed. Some market observers assert that ETH’s plunge stems from a lack of compelling narratives. Conversely, Evans suggests the market is currently in a risk-off mode, anticipating potential outflows from Grayscale’s ETH Trust could diminish the potential allure of an ETH ETF.
“Concerns are widespread about the impact of Grayscale unlocking on the market, especially during low summer trading volumes. The overall risk aversion sentiment in the market has led to a general decrease in demand for ETH.”
Simultaneously, based on Fibonacci retracement levels of 61.8% from the lows and highs of 2024, ETH’s pullback precisely touched a critical support zone seen as a likely bounce-back point.
The 61.8% Fibonacci level ($28,000) not only represents double the daily order blocks (marked in turquoise) but also serves as a significant support level for the first half of 2024. Whether this support holds may hinge on future movements of Bitcoin (BTC).
However, negative outflows in the derivatives market further highlight investor risk aversion. According to Coinglass data, ETH has seen a net outflow totaling $4.5 billion since July 1st, indicating bearish sentiment in the market and tepid responses to the forthcoming ETF.
Yet, Bloomberg’s latest report suggests that only a dovish shift by the Fed with “one or two rate cuts” could potentially improve sentiment in the crypto market.
