The long-awaited date is now behind us: this Tuesday, July 23, Ethereum spot ETFs finally entered trading. The developing scenario highlights massive sales on Grayscale's ETHE. Like a Bitcoin ETF that had managed to absorb these sales, will institutions be able to reproduce the same pattern?
It is Saturday, July 27, 2024, and the ETH price is hovering around $3,250.
Ethereum spot ETFs are now available in the United States; this event, expected since its announcement at the end of May 2024, was at the center of attention throughout the ecosystem, with some betting on an explosion of ETH on this occasion and others on a scenario close to that of the Bitcoin ETFs accepted last January.
This first week of trading was marked by net sales of 450,000 ETH ($1.5 billion) on Grayscale's ETHE ETF. It should be remembered that this product, formerly a trust then converted into an ETF, offers management fees much higher than all other solutions, making it much less competitive. This factor probably favours the migration of capital towards more attractive products..
To stay competitive in the race for fresh funds, a second ETF was launched by Grayscale, the mini Ethereum ETF, whose ticker was soberly named ETH. This one recorded positive inflows of around 50,000 ETH throughout this week, or $164 million, a figure well below the sales of the ETHE we discussed earlier.
That said, ETHE was the only ETF to see net outflows throughout the week as all other ETFs saw inflows. Including Grayscale’s mini ETH, around 347,000 ETH was added to institutional portfolios via BlackRock, Fidelity, VanEck, Franklin, 21 Shares, or Invesco.
In the balance sheet of the week, however, the balance is negative, with 100,000 ETH (or approximately $341 million) that could not be absorbed.. If the scenario observed on spot Bitcoin ETFs is repeated, 10 days had been needed before stabilizing the overall balance in favor of a positive series of several weeks. For Grayscale's BTC ETF, 4 consecutive months in the red had been recorded before a first positive day.
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ETH dominance under pressure again
Pairs with Ethereum | 24 hours | 7 days | 1 month |
Ethereum/USDT | +0.80% | -6.10% | -3.40% |
Ethereum/Bitcoin | -0.40% | -8.20% | -13.40% |
👉 How to easily buy Ethereum (ETH) in 2024?
ETH has weakened considerably this week, losing relative strength against Bitcoin, but also against the broader altcoin market. Overall, Ethereum dominance is in a wide range between 15% and 21%, but it tends to move more contained between 16.5% and 20%. These two working areas share an equilibrium around 18%, a polarity zone for dominance.
A monthly close below 16.5% this Wednesday could lead ETH to undergo unfavorable arbitrages towards other assets including BTC and SOL. Indeed, these 2 assets are on the contrary showing strength during this period.
In another scenario, regaining the 18% would benefit ETH and put it in a position for favorable arbitrages.
Ethereum Dominance Chart Monthly
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Against Bitcoin, Ethereum failed once again to break out of the descending channel and is retracing significantly this week, regaining the center of the bearish channel and the support zone drawn in green. The weekly candle is however not closed and the bullish camp would welcome a close above 0.05 in order to show reaction on support by regaining key horizontal levels in the short term.
As it stands, the bearish trend remains active, the ETH/BTC pair can continue to dig by crossing the middle of the bearish channel towards the lows of May 2024. This week's candle, the candle launching Spot ETF negotiations, will probably be a witness candle to take into account for the future.
In addition, the low point of this candle will be a benchmark for the coming week for a bearish continuation. Its peak, on the contrary, would mark, if crossed, a positive signal in the dominance of Ethereum against Bitcoin.
ETH vs BTC weekly price chart
Solana’s SOL seems to be preparing an exit upwards. This is probably an all-time high that could be achieved for the SOL vs ETH pair if spot ETF trading does not show more positive signals next week. Crossing the red zone and settling above it could attract more capital to SOL in favorable arbitrages.
That said, the top of the range has not yet given way, still offering resistance and providing a friction zone that Solana could reject to the downside. This illustrates both the relative weakness of ETH and the change in status of Solana, which is in the eyes of investors arguably the #1 alternative to their investments in a smart contract platform in the layer 1 ecosystem.
SOL vs ETH Weekly Price Chart
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ETH, a close above $3,400?
Ethereum price action is also showing weakness against the dollar, re-entering below $3,400 on a daily basis. In weekly trading, this will be the objective for closing on Sunday evening to maintain the good dynamic established last week: close above $3,400 to maintain a positive polarity..
This setup would mark an absorption under support, reflecting buyers’ willingness to maintain polarity for Ethereum. This significant move would offer, despite pressure from spot Ethereum ETFs, a strong probability of regaining the 2024 highs.
Otherwise, last week's opening price around $3,250 is an important benchmark. Closing below this level would mark a bearish retracement of the previous candle, in addition to a bullish breakout failure pattern. This would then be a significant bearish signal, sending price targets back towards a retest of the lows of recent weeks ($2,800).
If the latter were to give way, the 50-week moving average at $2,600 could be the first target before considering a return to the $2,000 to $2,200 zone.
ETH Price Chart Weekly
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In summary, Ethereum is losing relative strength in the crypto market. The pressure from Grayscale’s selling is weighing on psychology and price action. Technically, a close above $3,400 would be a very good signal to the market, marking the charts with renewed positive polarity.
Be careful, however, with the resurfacing and the configuration in “ swing fail pattern » in case of closing below the opening prices of the previous week.
So, do you think ETH can outperform the crypto market again? Please feel free to give us your opinion in the comments.
Have a great day and we'll see you next week for another technical analysis of Ethereum.
Sources: TradingView, Coinglass, GlassnodeETF
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