ETF ETH ATH?

24.05.2024 11:13|Analyst Team, Conotoxia Ltd.

Yesterday (23 May), the Securities and Exchange Commission (SEC) approved the creation of all eight ETFs based on ethereum, the second largest cryptocurrency. Trading in these funds, for formal reasons, will only begin in a few months, probably in July or August. Despite the positive decision, the price of the cryptocurrency, after a 30 per cent rise in May, has fallen by 5 per cent since yesterday. Let us then consider what the future holds for the price of ethereum?

Table of contents:

  1. What impact can an ETF have on ethereum?
  2. What can we expect in ethereum ETF listings?

What impact can an ETF have on ethereum?

The current situation in the ethereum market is very reminiscent of the behaviour of the bitcoin price at the time of the approval of ETFs. Since the first mentions of the probable approval of ETFs for bitcoin last September, the price of the cryptocurrency has risen by 160 per cent. This was a watershed moment for the market, which initiated an influx of new capital. The amount of money in the cryptocurrency market, as measured by stablecoin capitalisation, then reversed its negative trend, although it is still 11 per cent below its historical peaks.

chart stalbecoin capitalisation

Source: Defilama

However, as is currently happening with ethereum, following the approval of bitcoin ETFs on 11 January, the price of this cryptocurrency experienced a sharp sell-off, falling by 18.4 per cent. This seems to confirm the famous market saying "buy the rumours, sell the facts".

BTCUSD chartsource: Conotoxia MT5, BTCUSD, H4

It is important for investors to pay attention to the measurable factors that influence the markets to avoid falling into an emotional roller coaster. In the case of bitcoin ETFs, $45.9 billion has flowed into them since the day they were first listed, and another $13.3 billion since then, a total of 4.3 per cent of bitcoin's capitalisation. A similar scenario is now expected by ethereum investors.

Chart of inflows into ETFs

Source: Farside

What can we expect in ethereum ETF listings?

Currently, the ethereum price seems to be replicating bitcoin's behaviour when ETFs are approved. This would mean that the sell-off on the second largest cryptocurrency could continue in the coming weeks. However, long-term, we are likely to see a new All Time High (ATH) on ethereum later this year.

 

Grzegorz Dróżdż, CAI MPW, Market Analyst of Conotoxia Ltd. (Conotoxia investment service)

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71.48% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 71.48% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Trading on CFDs is provided by Conotoxia Ltd. (CySEC no.336/17), which has the right to use the Conotoxia trademark.