Hong Kong spot Bitcoin and Ethereum ETFs underperform issuers’ expectations on the first day of trading.
Ethereum liquidations have exceeded those of Bitcoin.
Ethereum (ETH) experienced a further decline on Tuesday following a disappointing first-day trading volume for Hong Kong’s spot Bitcoin and ETH ETFs. This comes off the back of increased long liquidations and mixed whale activity surrounding the top altcoin.
Read more: Ethereum erases weekend gains as yearlong SEC investigation comes to light
Ethereum’s decline has triggered increased long liquidations in the past 24 hours. Here are key market movers for the largest altcoin:
Asset manager Grayscale transferred 5,626 ETH worth $17.83 million to liquidity provider Flow Traders on Tuesday, according to data from Lookonchain. Grayscale has transferred ETH to Flow Traders four times in the past three months, totaling 23,178 ETH worth $71.3 million.
While a few whales may be selling in the short term, Glassnode data reveals ETH’s exchange supply has declined and is dropping even faster than Bitcoin. This aligns with several whale activities in the past three weeks as exchanges like Binance have experienced massive ETH withdrawals. Hence, most investors may be holding on to Ethereum with the expectation of a rally in the long term.
Founder of Tron blockchain Justin Sun, who has been linked with several whale ETH purchases since March, shared his thoughts on the Ethereum staking and restaking boom.
He shared that restaking and staking protocols have made significant progress and will spin off into operating entities to support blockchain networks worldwide. Several crypto community members highlighted that this may be the reason for his potential ETH buying spree in the past weeks.
Also read: Bitcoin, Ethereum Spot ETF in Hong Kong sees underwhelming response with $12 million in trade volume
Despite high projections by issuers for Hong Kong’s spot Bitcoin and Ethereum ETFs, they underperformed widely, bringing in a total trading volume of about $12 million on their first day. This is barely a pinch compared to the $4.6 billion first-day trading volume of Bitcoin ETFs—383 times higher than that of Hong Kong.
Following ETH’s further decline on Tuesday, its liquidations have exceeded Bitcoin’s for the second consecutive day on Tuesday. Ethereum has seen a total of $91.76 million in liquidations compared to Bitcoin’s $68.51 million. The market decline is hitting hard on ETH long traders, who have experienced $73.62 million in liquidations.
Ethereum saw another day of increased decline as prices slipped below the $3,000 key level on Tuesday. Considering the market has been waiting on a price trigger since the week began, the disappointing trading volume of Hong Kong’s spot BTC and ETH ETFs caused the sharp decline.
Also read: Ethereum cancels rally expectations as Consensys sues SEC over ETH security status
While short-term price movement indicates more decline, exchange withdrawals from long-term bulls could be a strong support to prevent a decline below the $2,852 key level.
ETH/USDT 4-hour chart
Hence, if ETH fails to break below this level, it may bounce up to fill up recent market inefficiencies. ETH’s recovery from this descent could see it break past the $3,300 key level to tackle inefficiencies at the $3,454 level formed on April 12. This thesis may be invalidated if a key macro event significantly affects the crypto market.
An Exchange-Traded Fund (ETF) is an investment vehicle or an index that tracks the price of an underlying asset. ETFs can not only track a single asset, but a group of assets and sectors. For example, a Bitcoin ETF tracks Bitcoin’s price. ETF is a tool used by investors to gain exposure to a certain asset.
Yes. The first Bitcoin futures ETF in the US was approved by the US Securities & Exchange Commission in October 2021. A total of seven Bitcoin futures ETFs have been approved, with more than 20 still waiting for the regulator’s permission. The SEC says that the cryptocurrency industry is new and subject to manipulation, which is why it has been delaying crypto-related futures ETFs for the last few years.
Bitcoin spot ETF has been approved outside the US, but the SEC is yet to approve one in the country. After BlackRock filed for a Bitcoin spot ETF on June 15, the interest surrounding crypto ETFs has been renewed. Grayscale – whose application for a Bitcoin spot ETF was initially rejected by the SEC – got a victory in court, forcing the US regulator to review its proposal again. The SEC’s loss in this lawsuit has fueled hopes that a Bitcoin spot ETF might be approved by the end of the year.
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