ETH Mimics BTC's Post-ETF Crash, Hinting at Massive Rally Ahead

Highlights

The two converging trendlines drive the current sideways action in ETH price.
Ethereum Fear and Greed index at 54% highlights the neutral sentiment among market participants.
The intraday trading volume in Ether is $17.5 Billion, indicating a 29% loss.

This week, the second-largest cryptocurrency Ethereum experienced a significant decline in value despite the highly anticipated launch of a spot ETH ETF. The coin price dropped 13.3% from a high of $3560, settling at $3258, while its market cap fluctuated around $391.8 billion. This downturn was influenced by a considerable outflow from the Grayscale ETF ($ETHE), echoing the pattern observed with Bitcoin following its ETF debut in January. Market observers suggest that this trend of an initial decline could precede a substantial rally for the asset.

Watch Major Support & Resistance Amid Post ETH ETF Fall

BINANCE:ETHUSDT Chart/ ETH ETF — ETH Price| Tradingview

Over the past four months, the Ethereum price has fluctuated, confined between a declining trendline and a $2850 support level. This horizontal support intact since November 2023 has formed a robust accumulation zone for buyers.

Amidst a market rebound, a recent bounce from this support propelled Ethereum’s price by 26.8% to reach $3558, before it entered a fresh correction phase. Today, the ETH price is up 3% seeking sustainability amongst 200 EMA. However, the altcoin below the daily EMAs (20, 50, and $100) indicates the path to lead resistance down.

As per the data from Arkham Intelligence, Grayscale executed a substantial transfer of 110,867 ETH, valued at approximately $358 million, to Coinbase Prime. This transaction occurred shortly after a notable outflow from the Grayscale Ethereum Trust (ETHE) on July 25, amounting to $346 million. The total historical outflow from ETHE has now reached a staggering $1.157 billion.

Should supply pressures continue, the Ethereum price forecast hints 8.5% to retest the lower trendline, a support that has revitalized buying interest after previous corrections.

The current correction resembles the post-Bitcoin ETF downfall in January. If the pattern holds true, the current sell-off could throw the weak hand off the market and attract strong players.

In a recent analysis by Eric Balchunas that these ETH ETFs have not matched the strength of their Bitcoin counterparts in mitigating the impact of Grayscale outflows, there is still positive news. The inflows and volume for these ETFs remain robust, suggesting healthy investor interest.

The ‘New Eight’ Ether ETFs not quite as strong as the ‘New Nine’ bitcoin ETFs in offsetting Grayscale outflows but good news is their inflows/volume is still very healthy, and the intensity of the $ETHE unlock will die down sooner than it did w $GBTC = outlook good but next few… https://t.co/DnOsKsouzP

— Eric Balchunas (@EricBalchunas) July 26, 2024

Balchunas notes that the intensity of the current unlock phase for the Grayscale Ethereum Trust (ETHE) is expected to subside more quickly than the previous unlock for the Grayscale Bitcoin Trust (GBTC). While the short-term outlook may present challenges, the overall forecast remains optimistic.

Overall, if Ethereum rebounds from the support trendline, there could be significant momentum towards breaking the upper resistance trendline. A successful breach could potentially propel prices past the previous high of $4891.

Frequently Asked Questions (FAQs)

1. What is an ETH ETF?

An ETH ETF, or Ethereum Exchange-Traded Fund, is a type of investment fund traded on stock exchanges, similar to stocks.

2. What is the Fear and Greed Index?

The Fear and Greed Index is a sentiment analysis tool that gauges the emotions driving the market. It ranges from 0 to 100, with lower values indicating fear (potentially undervalued markets) and higher values indicating greed (potentially overvalued markets).

3. What is the Grayscale Ethereum Trust (ETHE)?

The Grayscale Ethereum Trust (ETHE) is a financial product offered by Grayscale Investments. It allows investors to gain exposure to Ethereum through a traditional investment vehicle, without the need to buy, store, or secure the actual cryptocurrency.

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Sahil Mahadik

Sahil is a dedicated full-time trader with over three years of experience in the financial markets. Armed with a strong grasp of technical analysis, he keeps a vigilant eye on the daily price movements of top assets and indices. Drawn by his fascination with financial instruments, Sahil enthusiastically embraced the emerging realm of cryptocurrency, where he continues to explore opportunities driven by his passion for trading

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