The Unexpected Struggle of Ethereum Price Post Spot ETF Launch

The launch of the Spot Ethereum ETFs was expected to bring positive momentum to the price of Ethereum. However, the reality has been quite the opposite. Since the ETFs started trading on July 23rd, Ethereum has seen a decline of around 10% in its value. This unexpected struggle has proven that the launch of the ETFs was more of a ‘sell the news’ event rather than a bullish catalyst.

According to Markus Thielen, the Head of Research at Matrixport, there are several reasons behind the decline in ETH price. One of the major factors is the outflows from the Grayscale Ethereum fund, which holds approximately $9 billion in ETH. Following the launch of the Spot Ethereum ETFs, Grayscale started recording significant outflows from its fund due to high management fees. In just two days, $807 million flowed out of the fund, putting selling pressure on the market.

Thielen also points out that the ETH price may have reached its top, citing the daily stochastics indicator as a guide. The indicator had reached a score of 92% before the launch of the ETFs, indicating an overbought territory. A score above 90% is usually considered bearish for the price, as it signals a possible decrease in value as investors start offloading their holdings. The indicator has since dropped to 87%, suggesting that there could be further decline in the price of Ethereum.

Considering the recent rally in the market and the potential impact of Mt. Gox distributions, as well as the upcoming US earnings season and weak seasonals for August and September, Thielen suggests that it might be wise to press the Ethereum short position a bit longer. With multiple bearish factors at play, it is likely that the ETH price will continue to face downward pressure in the near future.

The unexpected struggle of Ethereum price post the Spot ETF launch has caught many investors off guard. The high outflows from the Grayscale Ethereum fund, coupled with the overbought signal from the stochastics indicator, paint a bearish picture for the second-largest cryptocurrency. It remains to be seen whether Ethereum can weather this storm and regain its footing in the market.