Potential Ethereum Sell-Off Looms Following ETF Launches: Analysis Shows 10x Gain
A recent report from 10x Research is advising investors to exercise caution when considering Ethereum, suggesting that the launch of Ethereum exchange-traded funds (ETFs) could potentially trigger a sell-off instead of a sustained uptrend.
The report highlights historical patterns indicating that events such as ETF launches have often been followed by market corrections. This trend has been observed in past instances like the Bitcoin futures launch in December 2017 and the recent introduction of Bitcoin spot ETFs.
Several factors outlined in the report may temper enthusiasm for Ethereum ETFs. These include limited marketing efforts by ETF issuers, which could lead to reduced interest from both retail and institutional investors. Additionally, the relatively low annualized funding rate for Ether futures (7-9%) may not attract substantial arbitrage flows from institutions. Ethereum’s staking yield of 3.12% is also seen as less appealing in the current high-interest-rate environment. Moreover, there has been stagnant growth in Ethereum network activity, with user numbers resembling those from three years ago.
From a technical perspective, analysts suggest that Ethereum’s current price of approximately $3,500 may be overbought based on the stochastics indicator. They recommend a stop-loss at $3,560 for any short positions.
The report also touches on the emerging narrative that the current cycle could favor Solana over Ethereum, citing higher active user numbers for Solana compared to Ethereum.
For investors seeking to leverage these market dynamics, 10x Research proposes strategies such as a long Bitcoin versus short Ether approach, or utilizing options to sell ETH calls and buy Bitcoin calls.
The approval of Ethereum ETFs, following the green light given by the Securities and Exchange Commission (SEC) to exchange applications in May, has been eagerly anticipated within the crypto community. This development follows the successful launch of Bitcoin spot ETFs in January, which have amassed over $54 billion in assets under management.
Looking ahead, the crypto landscape is rapidly evolving with the introduction of institutional-grade investment products. Industry professionals and enthusiasts are anticipated to delve into the implications of these developments at the upcoming Benzinga Future of Digital Assets event on Nov. 19.
