Ethereum
Digging Deep to Understand Why Ethereum (ETH) Is Down Today
Ethereum (ETH) is down 7.91% year to date, despite the successful launch of Spot Ethereum AND F which attracted $10.2 billion in assets and recorded net inflows of $107 million. Why so much trouble?
After maintaining a neutral trend for about a week, Ethereum failed to break through a critical resistance zone. As a result, it saw a 7.30% correction over the past day, with a trading volume of 20.662 billion dollars, a variation of 7.83%.
According to the 10X Research Report, the initial excitement surrounding the Ethereum ETF launch has faded, leading to a typical “sell the news” scenario. This pattern has been observed during similar events in December 2017, April 2021, October 2021, January 2024, and now July 2024. This pattern often indicates that after the initial hype surrounding the launch, a market correction tends to follow.
The report also highlights the unfortunate timing of the ETF launch, which coincided with the distribution of Bitcoin Mt. Gox, adding further selling pressure to the cryptocurrency market. Additionally, the U.S. tech earnings season got off to a rocky start, with major selling from companies like Alphabet and You’re here.
With 40% of the market cap set to be released next week, a conservative outlook due to weak consumer spending could still impact the market. Additionally, Ethereum (ETH) appears particularly vulnerable in current market conditions. Its fundamentals, including new user growth and revenue, have stagnated. Ahead of the ETF launch, 10X Research identified Ethereum as overbought and ripe for a short trade, a view supported by a 6% decline since the report was released.
If the market regains momentum, Ethereum will look to test its resistance level at $3,272.50. If the bulls sustain the price at this level, it could allow ETH to challenge its upper resistance level of $3,700 in the coming weeks.
If bears continue to dominate the market, Ethereum price will likely fall towards the support trendline of Triangle pattern. If the bulls fail to sustain the price at this level, ETH will prepare to test its crucial support level of $2,870.