- Ethereum sees over $108 million in liquidations as Mt. Gox begins repayment to creditors.
- Grayscale Ethereum Trust switched to trading at a premium to net asset value as spot ETH ETF launch draws closer.
- Ethereum may begin consolidation as key support may prove crucial in coming days.
Ethereum (ETH) is down nearly 5% on Friday following the Mt. Gox BTC repayment, sparking more than $108 million in ETH liquidations. The repayment's supply strengthened the bearish momentum on Bitcoin, which spiraled into altcoins like ETH.
Daily digest market movers: Mt. Gox headwind, ETHE discount
The defunct exchange Mt. Gox began the repayment of creditors today after transferring about $84.87 million worth of BTC to Japanese exchange Bitbank's hot wallets. The move increased the prevailing bearish sentiment in the crypto market as altcoins, led by Ethereum, suffered significant declines.
While many expected ETH to be less affected by the wider market sentiment due to the upcoming spot ETH ETF launch, the Securities & Exchange Commission's (SEC) slow move to greenlight issuers’ S-1 drafts likely gave bears the momentum.
The SEC approved the 19b-4 forms of spot ETH ETF issuers on May 23 but needs to greenlight their S-1s before the products can begin trading. The prospective issuers include VanEck, BlackRock, Bitwise, Grayscale, 21Shares, Fidelity, Franklin Templeton and Invesco.
Meanwhile, the Grayscale Ethereum Trust (ETHE) switched from trading at a discount to net asset value (NAV) to a premium of about 0.31% on July 3, according to data from YCharts.
A trust trading at a discount or premium to net asset value means one share of the trust trades below or above the market price of the underlying asset it tracks.
ETHE Discount or Premium to NAV
ETHE has been trading at a discount because investors must sell their shares to exit their positions, as the trust doesn't allow them to redeem it for cash. The discount particularly increased between March and May after rumors of the SEC's Ethereum 2.0 investigation.
However, the gap has closed and is now at a premium as investors bought the discounted shares heavily following the SEC's approval of prospective issuers' 19b-4 filings. The $9.5 billion ETHE trust will convert to an ETF when spot ETH ETFs go live.
ETH technical analysis: Ethereum may begin consolidation
Ethereum is trading around $2,984 on Friday, down nearly 5% in the past 24 hours. The further decline from Thursday's lows sparked historic liquidations for ETH, wiping off $134 million of open positions from the market. Long liquidations climbed to $108.4 million, while shorts were shy of $26 million.
ETH's price has reached the lows of May, when most investors expected a spot ETH ETF denial following reports that the SEC was investigating Ethereum 2.0. ETH broke below the $2,852 key support level but quickly posted a weak exhaustion liquidity void, considering this represents a key demand zone for the top altcoin.
ETH/USDT 8-hour chart
ETH has failed to sustain an extended move below this support level since mid-February. Additionally, IntoTheBlock's data reveals investors purchased about 57.02 million ETH around the $2,268 to $2,909 price range.
Considering these factors, ETH may not sustain an extended decline below the $2,852 support as the weekend approaches. ETH will likely begin a horizontal trend around the $2,852 to $3,367 price range, where it traded for nearly five weeks (April 12 - May 19).
Cryptocurrency metrics FAQs
The developer or creator of each cryptocurrency decides on the total number of tokens that can be minted or issued. Only a certain number of these assets can be minted by mining, staking or other mechanisms. This is defined by the algorithm of the underlying blockchain technology. Since its inception, a total of 19,445,656 BTCs have been mined, which is the circulating supply of Bitcoin. On the other hand, circulating supply can also be decreased via actions such as burning tokens, or mistakenly sending assets to addresses of other incompatible blockchains.
Market capitalization is the result of multiplying the circulating supply of a certain asset by the asset’s current market value. For Bitcoin, the market capitalization at the beginning of August 2023 is above $570 billion, which is the result of the more than 19 million BTC in circulation multiplied by the Bitcoin price around $29,600.
Trading volume refers to the total number of tokens for a specific asset that has been transacted or exchanged between buyers and sellers within set trading hours, for example, 24 hours. It is used to gauge market sentiment, this metric combines all volumes on centralized exchanges and decentralized exchanges. Increasing trading volume often denotes the demand for a certain asset as more people are buying and selling the cryptocurrency.
Funding rates are a concept designed to encourage traders to take positions and ensure perpetual contract prices match spot markets. It defines a mechanism by exchanges to ensure that future prices and index prices periodic payments regularly converge. When the funding rate is positive, the price of the perpetual contract is higher than the mark price. This means traders who are bullish and have opened long positions pay traders who are in short positions. On the other hand, a negative funding rate means perpetual prices are below the mark price, and hence traders with short positions pay traders who have opened long positions.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended Content
Editors’ Picks
Is Altcoin Season here as Bitcoin reaches a new all-time high?
Bitcoin reaches a new all-time high of $98,384 on Thursday, with altcoins following the suit. Reports highlight that the recent surge in altcoins was fueled by the victory of crypto-friendly candidate Donal Trump in the US presidential election.
Shanghai court confirms legal recognition of crypto ownership
A Shanghai court has confirmed that owning digital assets, including Bitcoin, is legal under Chinese law. Judge Sun Jie of the Shanghai Songjiang People’s Court shared this opinion through the WeChat account of the Shanghai High People’s Court.
BTC hits an all-time high above $97,850, inches away from the $100K mark
Bitcoin hit a new all-time high of $97,852 on Thursday, and the technical outlook suggests a possible continuation of the rally to $100,000. BTC futures have surged past the $100,000 price mark on Deribit, and Lookonchain data shows whales are accumulating.
Shiba Inu holders withdraw 1.67 trillion SHIB tokens from exchange
Shiba Inu trades slightly higher, around $0.000024, on Thursday after declining more than 5% the previous week. SHIB’s on-chain metrics project a bullish outlook as holders accumulate recent dips, and dormant wallets are on the move, all pointing to a recovery in the cards.
Bitcoin: New high of $100K or correction to $78K?
Bitcoin surged to a new all-time high of $93,265 in the first half of the week, followed by a slight decline in the latter half. Reports highlight that Bitcoin’s current level is still not overvalued and could target levels above $100,000 in the coming weeks.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.