The long-awaited launch of spot Ether exchange-traded funds (ETFs), which brought optimism to the market, quickly led to a sell-off and subsequent decline in the price of Ether.
According to the latest 10x Research report, this sell-off trend closely follows a familiar pattern seen by previous crypto ETF launches, including spot Bitcoin (BTC) ETFs.
Speaking with Cointelegraph, Markus Thielen, the founder of 10x Research, explained that many traders “anticipated Ethereum ETFs would capture 20% of Bitcoin ETF inflows.”
“However, they overlooked potential billion-dollar outflows from Grayscale and the tendency for exchange listings to trigger ‘sell the news' reactions. Additionally, the crypto market is entering a seasonally weak period.”
Market reaction
The approval and launch of spot Ether (ETH) ETFs coincided with the first BTC distributions from Mt. Gox, fueling the fire as selling pressure grew in the market.
According to the 10x report, Grayscale’s $9 billion Ethereum Trust experienced significant outflows — hemorrhaging $481 million on day one and $326 million on day two.
In contrast, other ETF issuers, such as Bitwise, recorded $204 million in inflows on day one, largely from the venture capital firm Pantera Capital.
Although this suggests a mixed sentiment in the market, Pantera’s apparent quick sell-off of its “seed investment” indicates a lack of confidence in sustained growth, per the report.
Ethereum vs. Bitcoin ETF
The report expresses a bearish outlook on Ether, indicating that it was overbought before the much-anticipated ETF launch.
“Ethereum might be the weakest link, where fundamentals (new users, revenues, etc.) have been stagnant or lower.”
The price of ETH has fallen almost 8% over the last 24 hours as price stabilizes around $3,181 following market uncertainty.
The 10x report explains that while BTC enjoys the status of “digital gold,” Wall Street traders struggle to define ETH’s unique value proposition.
“While tech investments are often risky, Wall Street people usually don’t place bets on things they don’t understand.”
Is Solana overtaking Ethereum?
According to a July 23 report, 10x Research revealed a stochastic indicator showing ETH at the top of its range, suggesting a possible market top.
“A reading above 90% is frequently associated with a correction, while a level below 15% has indicated lows to buy. With a current reading of 87% (from 92%), Ethereum appears on its way to a lower level.”
The report also highlights the shift from ETH to Solana (SOL) as memecoin issuance flocks to the Solana blockchain “but not ETH.”
The report warns investors that further declines could follow, with the potential overhang from Mt. Gox, the upcoming United States earnings season, and “weak seasonals for August and September.”