Ethereum mirrors Bitcoin’s post-ETF trend: Can ETH surge by 90%?

Ethereum, known for its volatility, is currently showing a correlation with Bitcoin’s post-ETF pattern, sparking speculation of a potential 90% rally. The recent drop in Ethereum’s price from $3.5k to $3k following the launch of a U.S. spot ETH ETF resulted in an 8% decline, with a slight recovery to above $3.2k at the time of writing.

Market observers, like Croissant, have noted similarities between Ethereum’s price action post-ETF launch and Bitcoin’s behavior after U.S. spot BTC ETFs were introduced in January. This observation suggests that if the correlation continues, Ethereum could dip to $2.7k in the next two weeks before potentially surging by 90%.

According to analysts, Ethereum could reach $6.5k by September, marking a significant rally over two months. Comparatively, Bitcoin experienced a drop from $48k to $40k post-BTC ETF launch, only to surge to $73k two months later in March.

While the correlation between Ethereum and Bitcoin post-ETF launches is intriguing, it’s essential to note that correlation does not always imply causation. Therefore, mirroring Bitcoin’s pattern may not guarantee the same outcome for Ethereum.

Analysts predict that Ethereum could benefit from expected Federal Reserve rate cuts in September, potentially boosting all risk assets, including cryptocurrencies. However, Ethereum has underperformed Bitcoin in its spot ETF debut week, with the ETHBTC ratio declining over 6% on a weekly adjusted basis.

There are concerns that a drop below the mid-range level, near 0.045, could further weaken Ethereum against Bitcoin. Analysts warn of the risk of ETHBTC dropping to 0.04 or below, making Ethereum less attractive as a hedge.

Recent outflows from U.S. spot ETH ETFs, totaling $133 million and $152 million, driven by Grayscale’s ETHE bleedout, have contributed to the apprehension in the market. Despite these challenges, analysts remain optimistic that a strong demand from U.S. investors could trigger a bullish reversal for Ethereum.

As of now, U.S. demand for Ethereum remains low, as indicated by the Coinbase Premium Gap. The future trajectory of Ethereum will likely depend on the interplay of various market factors and investor sentiment in the coming weeks.