The lacklustre performance of the recently released ETH spot ETFs ignited a crypto bloodbath in the early hours of Thursday. The super altcoin fell to a multi-day low of $3.1K from approximately $3.5K earlier this week.
US exchange-traded funds that had invested in spot Ether saw a net outflow of $113.3 million on their second day of trading, primarily due to significant losses from Grayscale’s Ethereum Trust.
The initial rumours that the approvals might be a “sell-the-news” moment proved to be accurate, as the underlying asset’s price responded with a significant drop, falling by double digits in a single day.
A total of 73,704 traders were liquidated for the day, resulting in a total liquidation value of $292.25 million. On Binance, the largest liquidation order ever occurred, with a BTCUSDT value of $11.78 million.
Ethereum’s price action
Price action on Binance shows Ethereum is trading at $3,172, down almost 7% over the past 24 hours and 7.4% for the past week.
According to historical statistics, the exchange reserve indicator has been significantly declining in recent weeks, especially after the announcement that Spot ETFs might be introduced in July.
This pattern suggests a substantial number of investors had bought the dip during the latest market drop. To decrease the number of coins available and indicate their long-term holding intentions, these investors are currently removing their coins from exchanges.
However, Ethereum buyers were unable to break through the last major swing high of $3.5K on the 4-hour chart due to high profit-taking from early buyers, leading to a period of sideways stabilization. This pattern usually indicates a reversal in the bear market. Nonetheless, a rebound in demand is anticipated given the overall bullish tendency, which could result in a breach above the wedge.
However, if there is an unexpected bearish breakout, the price could go through a brief period of correction before making its next bullish rise. It may be more advantageous for participants to accumulate ETH at lower prices in this scenario.
Ethereum spot ETFs post high outflows
Another strong day of selling from the newly converted Grayscale Ethereum Trust (ETHE), which lost $326.9 million in outflows, pulled down the new spot funds. Recent fundamentals imply that Ethereum is less competitive with Bitcoin.
This is because Bitcoin is the first product in the market and has a significant advantage over the super altcoin in institutional adoption. The proof-of-work process, which is the ultimate in decentralization, is one of the benefits of the Bitcoin network.
Institutional demand for Bitcoin is still rising despite the launch of Ethereum ETFs. Over the coming weeks or months, it will become clear which of the two coins will perform better in terms of ETF demand. Less appetite for risk is hurting the market.
The S&P 500 and Nasdaq saw their biggest losses since late 2022 on Wednesday, and in the early hours of Thursday, Bitcoin dropped below the $65K mark. The S&P 500 fell 2.1% and the Nasdaq fell 3.6% due to weak earnings reports from market leaders, including Tesla (TSLA) and Alphabet (GOOG).
Crypto traders are now turning their attention to Friday’s U.S. economic data release and Saturday’s speech by Donald Trump at the Nashville Bitcoin conference.
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