Key facts: ETH price declines could be buying opportunities. Unlike bitcoin ETFs, ether ETFs will be listed days after their approval. Now that the SEC, the American stock market regulator, has approved ether (ETH) exchange-traded funds (ETFs), the history of bitcoin (BTC) serves to explore possible price behavior. This is according to a new report from the market analysis company Growth Arcane. This company distinguishes that BTC performed well in the months leading up to the approval of its ETFs, due to the increasing probabilities of its achievement. However, it indicates that its completion in January 2024 led to a “news selling” event that lasted two weeks until momentum resumed. After the sale of the news, Strong capital inflows have propelled bitcoin to a new all-time high two months ago. And since then, as seen below, the market has remained within a sideways range below.
Bitcoin price in recent months. Source: TradingView. For Growth Arcane, It is likely to see similar price action for ETH, as it may attract investors looking for diversification.. However, he warns that there are several key differences to take into account, such as the fact that the approval of these instruments was not so early. “Consensus opinions changed dramatically and the probability of approval increased from 25% to 70% just four days before the decision,” he emphasized. This is different from what happened with bitcoin ETFs, where expectations of a green light from the SEC remained high for months before.
Due to this change in market expectations, the price of ETH rebounded sharply, gaining 22% in two days. Instead, BTC saw higher performance more gradually in the previous months.
“We wouldn't be surprised to see ETH rise even sharper than BTC, driven by investors eager to 'catch the bandwagon' they may have lost on BTC.” Growth Arcane, financial analysis company.
Ethereum has chances of a higher rise than bitcoin with ETFs
According to Growth Arcane, another key consideration is the uncertainty surrounding the launch date of Ethereum ETFs. The SEC, ETF issuers and exchanges have spent months negotiating the documents required to launch these BTC instruments, a process that has just begun for ETH ones. “This could take weeks or even months to finalize,” Growth Arcane warns. For now, There is no set date for the launch of Ethereum ETFs, while those of bitcoin came out the day after their approval. Therefore, although they have already been authorized, the inflow of capital that they can generate is delayed. Additionally, Growth Arcane highlights that the market capitalization of ETH is three times smaller than that of BTC, making it more volatile and easier to move in any direction. “We see this as a positive, especially considering that major players like BlackRock and JP Morgan have a positive outlook on ETH,” he emphasizes. Taking all this into account, the company It does not rule out that there is a sales event for the news after approval occurred, as other specialists have pointed out. “But we advise against operating with this expectation,” he clarifies, since an increase in demand is possible after the arrival of the ETF to institutional investors. To put it in perspective, remember Growth Arcane that those who sold BTC at the time of approval missed out on generating more returns if they didn't buy back at lower prices. Therefore, considers it more prudent to maintain exposure to ETH and accumulate in the face of setbacks. “We see opportunities to accumulate after a pullback between $2,900 and $3,200 which have historically been strong support and resistance levels,” the report mentions. As for when to take profits, he believes it is wise to progressively reduce exposure to ETH once it surpasses its all-time high. Meanwhile, other specialists see bullish possibilities that could mean better profit-taking timing ahead. From the Standard Chartered bank, for example, they maintain that Ethereum ETFs can attract inflows of between USD 15,000 million and USD 45,000 million that drive the price of ETH to USD 8,000 by the end of 2024. For now, as reported by BitcoinDynamic, ETH remains trading around USD 3,800, without showing much movement after the approval of the ETFs. Analysts such as Michaël van de Poppe consider that this shows that the market discounted the news two days before with a rise of 20% and is waiting for the launch to define the direction.