ETH ETFs Could Squeeze Bitcoin in Weak Market

Spot Ether ETFs may prompt investor diversification and potentially jeopardize Bitcoin’s value, says Charles Edwards of Capriole Investments.

According to a Bitcoin analyst, spot Ethereum exchange-traded funds (ETFs) might have debuted too soon. They could jeopardize the value of the cryptocurrency if fresh investment does not enter the market.

Charles Edwards, the founder of Capriole Investments, said that it would have been preferable to have simply the Bitcoin ETF available in 2024. He contends that investors in Bitcoin BTC$67,005 will merely become distracted by the upcoming Ether ETH$3,251 ETF.

Institutional investors in BTC ETFs believe they should purchase the ETF and diversify a little. According to Edwards, there is sell pressure on Bitcoin if there are no fresh flows into the market as a whole.

Based on Farside data, since the spot Bitcoin ETFs went live on January 11, almost $17.53 billion has been invested in the 11 products.

TradingView data shows that Bitcoin’s dominance has remained unchanged since Ether ETFs started on July 23. It increased by 0.07% on the last day.

On July 23, the first trading day for spot Ether ETFs, spot Bitcoin ETFs saw net outflows of $78 million; however, the next two days saw inflows of $44.5 million and $31.1 million, respectively.

Even yet, Edwards thinks there is ambiguity surrounding capital allocation when “launching an ETH ETF into a somewhat weak market, or not a strong one.”

“No strong catalysts in the near term for large price appreciation,” he adds in his prediction.

According to CoinMarketCap data, since spot Ether ETFs started on July 23 and were trading at $3,178, Ether’s price has decreased by 9.2% as of the time of publishing.

Compared to Bitcoin, Ether’s value has decreased marginally more, falling 10.4% in the last seven days.

According to CoinGlass, futures traders do not expect a sharp comeback either, with $1.32 billion in short bets at stake if the price rises to $3,500.

Nonetheless, Edwards and other crypto specialists concur that things “could look very different in a few weeks.”

Julio Moreno, chief of research at CryptoQuant, stated in an X post on July 25 that “the start of trading of spot ETH ETFs seems to have been a sell-the-news event,” similar to what happened with Bitcoin. Like Bitcoin, analysts attribute the price drop to the Grayscale Ethereum Trust.

Michael van de Pope, the founder of MN Trading, continued, “Once this massive amount of outflow stagnates or goes sub $100 million, the markets are reversing up.”

The 116,600 X followers of cryptocurrency analyst Croissant were informed, “Ethereum is following the same trajectory as Bitcoin after the ETF was approved.”

The hype was pre-calculated. According to cryptocurrency trader Kaleo, the future strategy is to do one final sweep of the range lows before sending it to price discovery.