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- Analyst Charles Edwards believes that the launch of spot Ethereum ETF could bring uncertainty in capital rotation and negatively impact Bitcoin.
- Despite the launch, spot Bitcoin ETFs continue to see inflows, while Ethereum ETFs face heavy outflows.
The much-awaited spot Ethereum ETFs have finally launched in the US market this week bringing excitement to Ethereum investors awaiting a strong ETH price rally, per the CNF update. However, one market analyst believes that the Ethereum ETFs have arrived ahead of their time and could threaten Bitcoin’s performance if fresh capital fails to enter the market.
Capriole Investments founder Charles Edwards said that the Ether ETF would only distract investors already invested in Bitcoin. He said that launching the ETF at the time of a weak market, or certainly not a strong one, creates greater confusion regarding capital allocation.
“It would have been better to only have the BTC ETF in 2024. Current BTC ETF holders at the institutional level likely think they should diversify a little and buy the ETH ETF. Without new flows into the whole market, this creates sell pressure on Bitcoin,” said Edwards.
However, this doesn’t seem to be entirely the case as inflows into spot Bitcoin ETFs have continued while the spot Ethereum ETFs have been seeing heavy outflows in the last two days. Similar to Bitcoin, the Grayscale Ethereum Trust (ETHE) has witnessed nearly $1.5 billion in outflows within just two days of its launch. On Thursday, the total outflows from spot Ether ETFs were $152.5 million.
On the other hand, spot Bitcoin ETFs have continued to see inflows this week, even after the Ether ETF launch, per the CNF update. This shows that Bitcoin demand continues to remain strong despite new products in the market.
ETH Price on Path to Recovery After Ethereum ETF Launch?
A day after the launch of spot Ether ETFs, the Ethereum price came under strong selling pressure crashing 9% all the way to $3,150 levels on Thursday. However, Ethereum seems to be on the path to recovery as it bounces back more than 3% from yesterday’s low and is currently trading at $3,250 with a market cap of $390 billion.
Similar to what we saw with Bitcoin, the launch of the spot Ethereum ETF has turned out to be a sell-the-news event in the market. Following the launch of Bitcoin ETFs in January, the Bitcoin price retraced by 20%. Thus, if Ethereum follows the same trajectory, we can expect it to slip all the way to $2,800 before resuming a rally to $4000 and beyond.
Market analysts are predicting a few more weeks of Ethereum consolidation and selling while expecting the next stage of the rally to resume by August end. “Once this massive amount of outflow stagnates or goes sub $100 million, the markets are reversing up,” said MN Trading founder Michael van de Poppe.
As reported by Crypto News Flash, XRP has outperformed Ethereum over the past two weeks despite the ETH launch.
