Ether exchange-traded funds (ETFs) saw a net drop of $98 million as of July 29, indicating four successive days of negative balance. This occurrence has been rare in recent months, reflecting intensified bearish sentiment among Ether investors, who may be diversifying to other cryptocurrency options or liquidating due to current market uncertainties. Despite this negative trend, there’s speculation that this could set the stage for a significant rally, a pattern witnessed previously in the volatile cryptocurrency market.
Financial gurus envisage a possible upswing due to an envisaged decrease in departures from a freshly transitioned Ether ETF, which could potentially elevate ETH prices. This prediction stems from the likelihood of a decrease in the number of departing investors following a successful shift to an Ether ETF. This scenario could potentially foster a bullish market for the Ethereum blockchain, bolstering ETH value.
Ether ETF downturn amidst predicted rally
Consequently, experts suggest that this could be an opportune time for both prospective and current investors to hold or expand their portfolio, thanks to seemingly favorable conditions for an Ethereum price upturn.
Senior analyst at Steno Research, Mads Eberhardt, forecasts a significant reduction in large-scale withdrawals from the freshly shifted ETH ETF this week, following total outflows amounting to $1.7 billion since the fund’s transition on July 24. Comparing this initial sell-off to investor confusion and adjustment challenges inherent to the fund’s transition, Eberhardt believes investor sentiment is stabilizing, thus anticipating a slow withdrawal.
However, while this Ethereum fund is on the decline, other Ethereum ETFs report consistent incoming funds. BlackRock’s iShares Ethereum Trust (ETHA) leads with a $500 million influx, followed by Bitwise Ethereum ETF (ETHW) with $276 million and Fidelity Ethereum Fund (FETH) with $244 million. Despite the downturn observed in one Ethereum fund, other Ethereum ETFs continue to experience consistent inflows.
Mads Eberhardt concludes that the substantial initial outflow from the new ETF, singly, could stimulate a short-term bullish market for ETH. This forecast aligns with trading patterns observed at the inception of Bitcoin (BTC) and Ether ETFs. Furthermore, Samara Cohen, ETF and index investments chief at BlackRock, identifies heightened interest among institutional investors toward cryptocurrency-focused ETFs and anticipates these ETFs to become staple portfolio features by 2024.
