ETH ETFs launched in ‘weak market’ and could pressure Bitcoin: Analyst

A Bitcoin analyst thinks spot Ethereum exchange-traded funds (ETFs) may have launched too early and could pose a risk to Bitcoin’s price if no new capital comes into the market.

“It would have been better to only have the BTC ETF in 2024,” Capriole Investments founder Charles Edwards told Cointelegraph. He argues that the new Ether (ETH $3,264) ETF will only distract investors who have been invested in Bitcoin (BTC $66,994).

“Current BTC ETF holders at the institutional level likely think they should diversify a little and buy the ETF ETF. Without new flows into the whole market, this creates sell pressure on Bitcoin,” Edwards argued.

Since spot Bitcoin ETFs launched on Jan. 11, approximately $17.53 billion has flowed into the 11 products, according to Farside data.

Since Ether ETFs launched on July 23, Bitcoin’s dominance has remained fairly stable, up 0.07% over the past 24 hours, according to TradingView data.

While spot Bitcoin ETFs recorded net outflows of $78 million on July 23 — the debut trading day of spot Ether ETFs — the following two days have seen inflows of $44.5 million and $31.1 million respectively.

Bitcoin dominance is sitting at 56.56%, up 2.81% across the week. Source: TradingView

Still, Edwards believes that “launching an ETH ETF into a somewhat weak market, or definitely not a strong one,” means there is uncertainty about capital allocation.

He also foresees “no strong catalysts in the near term for large price appreciation.”

At the time of publication, Ether’s price has dropped 9.2% since spot Ether ETFs launched on July 23, trading at $3,178, as per CoinMarketCap data.

Ether’s value has declined slightly more against Bitcoin, having declined by 10.4% across the past seven days.

Future traders do not anticipate a sudden recovery either, with $1.32 billion in short positions at risk if the price rebounds to $3,500, according to CoinGlass.

Ether is down 5.56% over the past seven days. Source: CoinMarketCap

However, other crypto analysts agree with Edwards that this “could look very different in a few weeks.”

“As with Bitcoin, the start of trading of spot ETH ETFs seems to have been a sell-the-news event,” CryptoQuant head of research Julio Moreno wrote in a July 25 X post. Also similar to Bitcoin, analysts blame the Grayscale Ethereum Trust for the price decline.

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

“Ethereum is following the exact same trajectory as Bitcoin after the ETF was approved,” crypto commentator Croissant told their 116,600 X followers.

“The hype looks like it was priced in. One last sweep of the range lows prior to sending to price discovery is still the game plan from here,” crypto trader Kaleo added.