According to CoinMarketCap data, the price of Ethereum fell by 9% to $3,169 within a single day on July 24. This came after the much-anticipated debut of spot Ether ETFs, which recorded net inflows of $106 million. This price movement shows a bearish trend, the reverse of the early enthusiasm that characterized the ETF’s launch.
Crypto trader Sheldon The Sniper stated that the price level of $3,200 is now in the buy zone. Sheldon identified $3,300 and below as critical buying levels, although the previous $3,097 lay had already been breached. The trader said that he expects Ether to possibly touch $4000 soon if this plays out.
Despite the recent launch of spot Ether ETFs, Ethereum's price took a nosedive when most expected gains, indicating a "sell-the-news" event. It is a deja vu feeling as to what Bitcoin did in January with almost the same kind of news.
According to CoinGlass data, the initiation of ETFs triggered a massive liquidation of long positions: $42.53 million of short positions versus $2 million of long positions.
That sell-off shows investors probably were taking some profits on the ETF approval hype, which led to the price decline. The underperformance of Ethereum's ETFs relative to Bitcoin is remarkable. Bitcoin experienced a huge price surge after an ETF launch, while for Ethereum, inflows following its first ETF disappoint relative to Bitcoin's.
Analysts such as Michael van de Poppe are anticipating this type of heavy action with Ethereum's price after ETFs launch. Van de Poppe stated: "This is a possibility, with Ether finding similar support to rally from $3,500 to $7,000–7,500, though short-term volatile action should not be overruled.". Swyftx lead market analyst Pav Hundal shared an even nearer price target for Ether at $4,890—its all-time high reached back in November 2021.
Swyftx lead market analyst Pav Hundal had set his target towards the short term for ether to hit the November 2021 all-time high of $4,890. However, looking at the current situation where the market is in a bearish phase, Hundal’s viewpoint is more in line with the general perception of a possible revival and positive trajectory in the prices of Ethereum.
Ethereum's price action has kept consolidation above 100—and 200-day moving averages, subsequently prompting a bullish trend. The net inflow of $106.6 million on its first day as the spot ETH ETFs were launched created buying pressure surrounding Ethereum in preparation for a possibly bullish rally. The price currently trades between significant support at $3,100 and resistance at $3,700. An exit from this area will signal that the bulls are in control.
Meanwhile, on-chain data shows that a big Ethereum whale just unloaded 10,000 ETH on Kraken, raking in profits of a whopping $173 million. This selling pressure is in turn causing Ethereum to follow suit and drop in prices in addition to the Mt. Gox distribution which has people worried in the crypto space.
Also, the exchange reserves of Ethereum have also been declining at a very fast rate, this is another sign that investors are moving their coins out of the exchanges to store them in their wallets for the long-term. This is very supportive of the fact that in the long run, despite the initial bearish reaction, the launch of the ETF may prove beneficial for the price of Ethereum.
QCP Capital analysts remain positive overall regarding Ethereum's medium- to long-term view. Higher levels of implied volatility in Bitcoin options signal the short-term market sentiment shifting in favor of Bitcoin and thus being at the expense of Ethereum. However, institutional support was still anchored on Ethereum reconverging with its previous all-time highs.
Crypto analyst Jelle noted that in the first few weeks, there were indeed some headwinds for Ethereum, although in the long run, the ETF will do much to help the price of ETH. Jelle opined that someone can be very patient, bearing in mind huge gains since Bitcoin had increased significantly since the ETF was made available.