the spot ETH ETFs arrived at the wrong time

The spot Ethereum ETFs were launched on the US exchanges in the second half of July, but the price of ETH did not benefit from it.

Instead, a few weeks after the launch of spot Bitcoin ETFs, in January, the price of BTC began to rise significantly. 

The comparison between ETH and BTC: the spot Ethereum ETFs are not going as hoped

The Bitcoin spot ETFs on the US exchanges were launched on January 11, 2024. 

At that moment the price of BTC was above $45,000, but just about ten days later it had fallen below $40,000. 

Two factors weighed heavily. The first was the expected “sell the news,” after the rise above $45,000 prior to the launch, while the second was the unexpected large liquidation of BTC by the Grayscale fund (GBTC) which became an ETF. 

However, a month after the launch, the price of Bitcoin had returned above $45,000, and from that moment within another five weeks, it rose to record new all-time highs above $73,000.

The spot ETFs on Ethereum on the US exchanges were launched on July 23, 2024.

At that moment the price of ETH was above $3,400, but within two weeks it had fallen below $2,400.

Even on this decline, the same two factors as before weighed in, namely the sell-the-news and the sales of the Grayscale fund (ETHE). 

In the second half of August, the price of ETH indeed attempted a rebound, even rising above $2,800, but starting from Monday the 26th, it began to fall again. Not only did it drop below $2,400, but on Friday, September 6, it briefly fell even below $2,200.

The trend of ETH price in 2024

The difference between the two parabole is clear, so much so that at this moment even the general performance of 2024 differs. 

In fact, since the beginning of the year, the price of Bitcoin has increased by 42%, while that of Ethereum today is substantially in line with the approximately $2,300 at the beginning of 2024.

In other words, between the second half of February and the beginning of March, the price of ETH rose very simply by following the rise of that of BTC, even reaching to touch 4,100$ for a brief moment. 

Until the end of May, the two trends continued to move in parallel, but starting from the beginning of June, the price of ETH began a long descent that to this day does not seem to be completely over yet. 

Within a month, it dropped from $3,800 to $2,900, then slightly rebounded in mid-July, and resumed falling after the launch of the spot ETFs. 

The moment when the price trend of Ethereum in this 2024 started to diverge from that of Bitcoin was the beginning of August, when BTC recorded a good rebound followed by a period of strong holding, while ETH recorded a small rebound followed by a new period of decline. 

The wrong time for the launch of Ethereum (ETH) ETFs 

According to the CEO of Bitstamp for the Americas, Bobby Zagotta, the timing of the launch of spot ETH ETFs would have been wrong. 

Zagotta does not hide that these ETFs have not met investors’ expectations so far, but attributes this debacle solely to the timing. 

He argues that at this moment cryptocurrencies are behaving like any other risk-on asset, and that the Ethereum spot ETFs were launched in the USA during a difficult time for risk-on assets, and for the markets in general. 

However, if this appears true for Ethereum and many altcoins, it does not seem entirely true for Bitcoin. 

For example, compared to the beginning of May, that is, just over three and a half months ago, the price of Bitcoin is essentially the same, while that of Ethereum is 23% lower. 

So the altcoin have reacted poorly to the trend of risk-on markets in recent months, while Bitcoin has not. 

Zagotta also points out that at this moment many investors are waiting, due to the uncertainty of the outcome of the US elections, regulatory issues, and some socio-political issues. Indeed, the situation seems quite stagnant, even if this means difficulties for altcoins. 

The turning point

In other words, the markets are waiting for a bull. 

A first event that could change the cards on the table is today’s decision, Wednesday, September 18, 2024, on interest rates. Although the markets have already priced in a cut, there is still a lot of uncertainty about its extent, because many experts predict a cut of only 25 basis points, while the markets are more oriented towards a cut of 50 points. 

To this must be added that often October is a good month for financial markets, and in particular for crypto ones, and that on November 5th the presidential elections will finally be held in the USA. 

Therefore, the current situation is unlikely to remain stagnant for much longer, even though it is not yet entirely clear in which direction it will move. 

In the past, after the US presidential elections, a great bull run of the crypto markets has always started, also thanks to a weakening of the dollar, but when something is too predictable, just a few unforeseen events are enough to change the situation.