Unexpected Ethereum Stability: Why ETH Price Remained Steady Amidst ETF Buzz
Date: 2023-09-11 Author: Dima Zakharov Categories: IN WORLD
In the cryptocurrency world, the entry of traditional financial institutions always creates a stir. Recently, on September 6th, Ark Invest, led by influential Cathie Wood, announced their intent to introduce the first Ethereum-based ETF. Such a move would undoubtedly make Ethereum, the second-largest digital asset, more accessible to institutional investors. Yet, Ethereum's price barely budged. Why didn't ETH's price soar in response? Let's delve in.
Traditional Financial Institutions and Crypto: A New Phase
Ark Invest's recent declaration about launching an Ethereum-based ETF highlights how traditional financial platforms are eyeing the immense potential of the crypto realm. Nonetheless, Ethereum's price remained stagnant, moving within its typical boundaries.
Here's an intriguing observation: Grayscale Investments' ETHE fund is nearing its annual peak, but Ethereum isn't following suit. A growing disparity between them reveals intricate market dynamics. ETHE's share price has rocketed over 140% since the start of the year, narrowing its discount to its underlying asset.
After BlackRock, an American investment behemoth, sought to introduce a Bitcoin-based ETF, the rate plunged from -56% to -36%. Ark's proposal for an Ethereum-based ETF further trimmed this gap by another 10%, marking the smallest difference since the previous November. This pattern suggests that the market anticipates the ETHE trust's transformation into an ETF.
A Climate of Fear: The Prevailing Mood in the Crypto Market
September ushered in a cloud of pessimism in the crypto sphere. Despite positive news like Grayscale's victory against the SEC and Ark's Ethereum-based ETF proposal, bearish sentiment persists. Glancing at the Social Volume indicator from Santiment, bearish mentions have consistently outpaced bullish ones since August 31st.
Looking back in history, one can recall March 8th, a day when a temporary disruption in USDC's stability and Silicon Valley Bank's collapse spread widespread fear among investors. Following that, Ethereum's price surged by 48%, soaring from $1,430 to $2,120 in just a month.
Ethereum's Current Stance: Stabilizing Around $1600
Given the prevailing indifference in the crypto market, Ethereum's price is likely to hover around the $1,600 mark. The asset is caught between two significant clusters. On one hand, 3.09 million addresses that acquired 5.1 million ETH at an average price of $1,623 provide substantial support. On the flip side, resistance from 2.9 million wallets, which purchased 6.5 million tokens at an average price of $1,670, exists. If they opt to exit their positions, a further downturn might ensue.
In essence, currently both buyers and sellers are transacting within a narrow range, where numerous positions are concentrated.
