As a seasoned analyst with over two decades of experience in the financial markets, I find myself closely watching the Ethereum ETF landscape and its recent trends. The continuous outflows from Grayscale’s Ethereum Trust, now totaling nearly $2 billion in seven trading days, are a stark reminder of the market’s unpredictability.
On July 31st (Wednesday), Ethereum ETFs saw another significant withdrawal of approximately $77.2 million. This continues a pattern of negative fund flows, even after a recovery on Tuesday. This large-scale withdrawal indicates a pessimistic stance among investors, as the Federal Reserve opted to maintain interest rates at their current level.
Ethereum ETF Outflows Surge
Over the past seven trading days, Grayscale’s Ethereum Trust (ETHE) experienced its largest withdrawals, amounting to approximately $133.3 million. This has now reduced its total assets to almost $2 billion. Simultaneously, the price of Ethereum dipped from around $3,340 to the $3,100 range.
BlackRock’s Ethereum ETF (ETHA) experienced a small increase in investments totaling $5 million. However, Franklin Templeton’s FETH took the lead with an impressive daily inflow of $18.8 million. Additionally, VanEck’s ETHV and Bitwise’s ETHW both registered inflows of approximately $4.8 million and $4.7 million each.
Although these favorable shifts are taking place, the combined total withdrawal for eight Spot Ethereum ETFs across seven trading days amounts to a massive $483.6 million. This significant outflow coincided with the Federal Open Market Committee’s (FOMC) decision to keep interest rates steady at 5.50%.
Ethereum Foundation Selloffs
Enhancing the already volatile market conditions, information from Arkham Intelligence points towards an Ethereum Foundation-linked address (0xd7…c1f4) offloading ETH. On a recent Wednesday, this address executed a sale of 150 ETH through Cow Protocol, converting it into approximately 497,250 DAI. Notably, this activity aligns with a recurring pattern that has been evident since the start of the year. This particular address has been seen selling Ethereum for DAI in quantities ranging between 50 to 200 ETH, every few weeks.
Lately, the Ethereum Foundation has been quite active in selling its Ether. On July 26th, a report from blockchain analysis firm Lookonchain showed that an Ethereum Foundation wallet moved 92,500 ETH, valued around $294.9 million, to a newly created wallet. This is the first substantial transaction made by this wallet in over six years. Such activity has contributed to the market’s volatility as the Spot Ethereum ETF was launched.
Additionally, on July 23rd, the Ethereum Foundation liquidated 100 Ether for approximately 345,179 DAI. This action took place during the debut of Spot Ethereum Exchange Traded Funds (ETFs), leading to conjecture about the influence of these sales on the market. The ongoing disposition of ETH by the Foundation has ignited debates concerning its possible effect on the Ethereum’s price, suggesting a potential downward trend.
What’s Next For ETH?
Earlier analysis by Coingape on ETH prices suggested that a drop below $3,300 might signal a change in market attitude, possibly prompting traders to think about opening short positions for Ethereum. Additionally, traders are keeping an eye on the Moving Average Convergence Divergence (MACD) indicator as it nears the neutral zone, since it could indicate sell signals.
As of the current reporting, the price of ETH dropped by 4.56% to reach $3,162 on Thursday, August 1. This decline below the significant support level at $3,300 suggests a potential continuation of the downward trend. Additionally, data from Coinglass shows that Ethereum experienced substantial long liquidations amounting to approximately $53.84 million within the last 24 hours. Such liquidations might have contributed to the price drop we witnessed today.
Moving forward, QCP Capital expects more withdrawals from Grayscale’s ETHE within the next fortnight. However, they still advise favoring long positions in ETH, as the outflows of ETHE are expected to level off and the ETH price is predicted to approach Bitcoin‘s value. Moreover, QCP Capital has established a goal of surpassing $4,000, which marks the 2024 peak for ETH.
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2024-08-01 11:04