Wall Street’s Understanding of Ethereum Still Lags Behind, According to 10X Research
Wall Street is facing a challenge in effectively conveying the value of the newly launched Ethereum ETFs to potential investors following their highly anticipated debut. A recent report by 10x Research reveals that BlackRock has taken to describing Ethereum (ETH) as “a bet on blockchain technology,” a characterization that may not be resonating with traditional investors.
The report highlights the skepticism within Wall Street, noting that individuals in this realm typically refrain from investing in assets they do not fully comprehend. This sentiment comes on the heels of the ETFs experiencing a total net outflow of $133 million on July 24. While the Grayscale Ethereum Trust (ETHE) saw a net outflow of $327 million, the Mini Ethereum ETF by the same firm witnessed an inflow of $46 million, with Fidelity attracting $74 million.
As of the third day of trading, the combined net asset value of U.S. Ethereum spot ETFs stands at $9.5 billion, according to data from SoSo Value. However, unlike Bitcoin’s widely accepted narrative as “digital gold,” Ethereum lacks a clear and compelling story, as observed by 10x Research, which maintains a bearish outlook on ETH.
The report points out the stagnant or declining fundamentals of Ethereum, such as new user growth and revenues, which contribute to its perceived weakness. Additionally, the absence of substantial marketing efforts by Ethereum ETF issuers raises questions about the platform’s visibility and awareness among potential investors.
Moreover, Ethereum co-founder Vitalik Buterin has notably refrained from actively promoting the platform, having delegated leadership responsibilities to emerging figures within the Ethereum community. This shift in focus, coupled with Ethereum’s diminished use case in the current market cycle, further underscores the challenges facing the cryptocurrency.
Technical indicators also raise concerns, with the stochastics indicator suggesting that Ethereum may be overbought, potentially signaling a downward trend in the near future. In light of these factors, 10x Research advises investors to consider a strategy of buying Bitcoin during bullish phases and shorting Ethereum when bearish sentiments prevail.
Given the prevailing market conditions and potential obstacles ahead, the research firm suggests extending the Ethereum short position. As the narrative surrounding Ethereum continues to evolve, the industry awaits further developments that may shape the future trajectory of the popular cryptocurrency.
