Bitfinex analysts said Ethereum’s (ETH) 40% decline following the launch of spot ETH exchange-traded funds (ETFs) in the US is an expected “sell-the-news” reaction.
According to the latest edition of the “Bitfinex Alpha” report, Ethereum ETFs are facing substantial challenges as significant outflows continue to weigh heavily on Ether’s performance, exacerbating the asset’s underperformance relative to Bitcoin.
The report highlighted the negative net flows of spot Ethereum ETFs — currently at $420 million in outflows — as the main force driving ETH’s price down in recent weeks.
It added that heavy selling from market makers like Jump Trading and Wintermute, along with a macroeconomic shakeup stemming from Japan’s recent rate hikes, have further contributed to the downtrend.
Ethereum weakness
According to the report, the Ethereum ETF market has seen significant fluctuations in fund flows, contributing to the observed weakness in Ether’s price compared to the broader crypto market.
On Aug. 5, the ETH/BTC pair hit its lowest level in over 1,200 days, dropping to 0.0367 — marking a significant decline from its peak in February 2021.
The report that the ETH/BTC pair has been trending downward since the Ethereum Merge in September 2022, and this recent move further deepens concerns about Ethereum’s relative weakness.
Bitfinex analysts believe a key factor contributing to this underperformance is the impact of Bitcoin ETFs, which have successfully directed passive flows and increased demand toward BTC. This dynamic has left Ethereum ETFs struggling to attract the same level of investor interest, even as they attempt to establish themselves in the market.
The persistent weakness in ETH/BTC suggests that deeper market forces are at play beyond the mere availability of institutional investment products.
Divergent ETF performance
Ethereum ETFs have shown some signs of recovery, particularly with BlackRock’s iShares Ethereum Trust (ETHA), which recorded…
Click Here to Read the Full Original Article at Ethereum (ETH) News | CryptoSlate…
