Why Ethereum Price is Down Today? Analyzing ETH Price Correction Post-ETF Launch
Qadir AK25 Jul 20243 min read
Ethereum (ETH) dropped 1.8% on Wednesday despite the successful launch of ETH ETFs, which attracted $10.2 billion in assets and saw net inflows of $107 million. The second-largest cryptocurrency by market cap is struggling, breaking below important support levels. The question arises: Is Ethereum poised to retest the critical $3,000 support level by the end of July?
Historically- a Drop Before a Rise
As per the 10X research report, the initial excitement surrounding the Ethereum ETF launch has dissipated, leading to what historically becomes a “sell-the-news” scenario. This trend has been observed during similar events in December 2017, April 2021, October 2021, January 2024, and now July 2024. This pattern often suggests that after the launch hype, a market correction follows.
What’s Causing this Sell Pressure?
The report further highlights the wrong timing of the ETF launch, which coincided with the distribution of Bitcoin from Mt. Gox Mt. Gox Mt.Gox is one of the world’s biggest Bitcoin exchanges that facilitates the trading platform for Bitcoin for local currencies across the world, quickly and securely. MT.Gox was founded in the year 2010 by Jed McCaleb and is based in Shibuya, Tokyo, Japan. Customers of Mt. Gox have atleast two sub-accounts one for bitcoins trading and one for their local currencies. Bitcoins can be purchased using the funds from the customers's bank account to their Mt.Gox account Funds of the Bitcoins can also be withdrawn in local currency to the customer’s bank account. [email protected] Centralised Exchange adding extra selling pressure to the crypto market. Plus, the US tech earnings season has started poorly, with significant sell-offs from companies like Alphabet and Tesla. With 40% of the market capitalization set to report next week, a conservative outlook due to weakened consumer spending could further impact the market.
Moreover, Ethereum appears particularly vulnerable under current market conditions. Its fundamentals, including new user growth and revenue, have stagnated. Before the ETF launch, 10X Research highlighted Ethereum as overbought, suggesting it was ripe for a short trade—a view supported by a 6% decline since the report.
Gear up for a Short-term Haul
As of Wednesday, Ethereum trades around $3,420, down 1.8% for the day. Coinglass data shows $14.15 million in 24-hour liquidations, with a bearish sentiment prevailing as indicated by the ETH Long/Short Ratio dropping to 0.91. Similar to Bitcoin’s behavior post-launch, Ethereum may experience a brief decline before a potential rebound. Currently, the RSI level is hovering below the midline, suggesting that bears have an advantage in controlling the current trend.
Technical indicators reveal a possible decline toward the $3,203 support level before a potential rise to $3,731 resistance.
On a Thin Ice! ETH’s May Drop to $3K?
Ethereum might test resistance at $3,400 if the market regains momentum, potentially aiming for $3,730 in the coming weeks. Conversely, if bearish trends continue, Ethereum could drop toward its crucial support level of $3,000 within this month.
Advice for Investors
In short, analysts suggest buying Bitcoin and selling Ether to the ETH traders. You can sell Ether options to pay for Bitcoin options. This strategy takes advantage of the current market situation, focusing on Bitcoin’s potential rise and protecting against Ether’s volatility.
Also Check Out : Ethereum Price Stays Quiet Amid $107 Million Net Inflow And Rising Bitcoin Volatility: What’s Next For ETH Price?
