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Highlights
- On Friday, Cathie Wood's Ark Invest sold 400 units each of ARKZ and EETH on August 9, signaling a bearish stance on Ethereum.
- QCP Capital noted a significant shift in liquidity from Ethereum to Bitcoin.
- Earlier this week, Ethereum faced a 22% drop, while Bitcoin remained relatively stable with a bullish outlook.
On August 9, Cathie Wood’s Ark Invest made notable moves in the crypto market by offloading significant portions of its Ethereum futures ETFs. This decision may signal a bearish outlook for Ethereum exchange-traded products (ETPs). Moreover, it reflects a broader shift in investor sentiment amid surging spot Ethereum ETF outflows.
Cathie Wood’s Ark Invest Dumps Ether Futures ETF
Ark Invest sold 400 units each of two Ethereum futures ETFs. These include Ark Active Ethereum Futures Strategy ETF (ARKZ) and the ProShares Ethereum Strategy ETF (EETH). The sale of ARKZ was valued at $12,056, while the EETH transaction amounted to $21,112.
Although these figures represent a relatively small divestment, they suggest a strategic repositioning by Ark Invest. It potentially indicating reduced confidence in Ethereum ETPs and the crypto’s short-term prospects. In contrast, the recent activity by Cathie Wood’s firm toward crypto stocks highlights a more bullish stance.
On August 7, the firm acquired 145,420 shares of Robinhood Markets Inc. (HOOD). It invested $2.4 million as the market showed signs of recovery. Moreover, this HOOD stock purchase came ahead of Robinhood’s earnings report, with the stock closing at $17.12 on the transaction day.
Additionally, Ark Invest bought 13,833 shares of Coinbase Global Inc. (COIN). It suggests a positive outlook as the asset climbed 2% following a period of downturn driven by recession fears. Moreover, the Cathie Wood-led firm had snapped up HOOD and COIN stock even during the market downturn.
Also Read: Grayscale Turns More Bullish On Bitcoin And Ethereum, Here’s Why
A Look At Ethereum ETF Market
Amid Cathie Wood’s Ethereum futures ETF dump, the broader ETH market showed mixed signals in recent days. On August 9, spot Ethereum ETF flows recorded a net outflow of $15.8 million. However, the weekly total remained positive at $104.8 million, indicating a mixed sentiment.
On Friday, BlackRock’s Ethereum ETF saw inflows of $19.6 million. Whilst, Fidelity’s FETH experienced more modest inflows of $3.9 million. On the flip side, Grayscale’s ETHE faced substantial outflows totaling $41.7 million.
Meanwhile, Ethereum price has been relatively stable, trading between $2,550 and $2,650. Despite this, the recent market behavior suggests a potential shift in sentiment. QCP Capital’s analysis highlights a fundamental shift in liquidity profiles between Bitcoin (BTC) and Ethereum.
Bitcoin Vs. Ethereum
According to QCP’s latest Weekend Brief, BTC appears increasingly integrated into mainstream macro capital markets, whereas ETH is becoming increasingly sidelined. This shift is partially attributed to the distinct lack of interest in spot Ethereum ETFs compared to spot Bitcoin ETFs. QCP Capital noted that BTC is perceived as “digital gold,” a narrative that has captured institutional investors’ attention. However, ETH lacks a comparable compelling story.
This perception was evident on August 5, when ETH experienced a 22% drop in value, compared to a 16% decline in BTC. This disparity underscores a broader trend where BTC is favored for its stability and mainstream acceptance. Whilst, Ether is seen as a more speculative asset with higher volatility.
The report also observed that the difference in implied volatility between BTC and ETH has widened significantly. Before the introduction of the ETH spot ETF, the volatility difference was around 5%. It has now expanded to approximately 20%, suggesting that investors might be shifting their strategies by selling BTC volatility and buying ETH volatility.
Despite these bearish signals, QCP Capital’s analysis suggests that ETH price’s increased volatility could present opportunities for significant gains. However, it also indicates the potential for larger drawdowns. Conversely, the strong and structural bullishness in BTC is reflected in consistent demand for Bitcoin call options expiring in 2025 with strikes near $100,000.
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