Ether price remains weak despite ETF launch, any positive signs? (Bitfinex)

The price of ether (ETH) has plunged more than 20% in the past month despite the launch of spot Ethereum exchange-traded funds (ETFs) in the United States. Since its inception, the funds have witnessed substantial outflows, further weakening the price of Ether.

According to the latest edition of the Bitfinex Alpha report, Ethereum ETFs have not shown resilience after initial breakouts like US-based Bitcoin ETFs did after their launch earlier this year.

Ether price still weak

Ether’s price weakness can be seen in the ETH/BTC pair, which has been on a downward trajectory since the Ethereum merger in September 2022. At that time, ETH experienced relative strength against bitcoin (BTC). Market participants expected the launch of Ethereum ETFs to strengthen ETH’s position, but the opposite has been the case; the weakness seen in the ETH/BTC pair has not only persisted, but intensified.

Earlier this month, the pair fell to its lowest level in roughly three years, touching 0.0367 ETH/BTC. It now faces resistance at the 0.0461 level, a high recorded in February 2021 during the peak cycle before the ETH/BTC bull market began. This weakness can also be attributed to spotting Bitcoin ETFs driving passive flows and increased demand towards BTC, a trend that has remained fresh for ETH since July 23rd.

“This ongoing trend raises questions about the ineffectiveness of Ethereum ETFs in balancing market dynamics between these two major crypto assets. ETH’s continued underperformance against BTC suggests deeper market forces at play, beyond the mere availability of institutional investment products,” Bitfinex analysts said.

Increase in ETF outflows

Analysts outlined several factors that have contributed to ETH’s decline since the launch of the ETFs. They include the large-scale selling of ETH by crypto market makers Jump Trading, Wintermute and Flow Traders, lukewarm sentiment around the launch of the Ethereum ETF, concerns about market volatility and liquidity, and an unfavorable macroeconomic environment .

Also, a notable factor affecting ether’s weakness is the rate at which the Grayscale Ethereum Trust (ETHE) is seeing exits and driving supply to the market. Compared to the Grayscale Bitcoin Trust (GBTC), which had around 76.3% assets under management on the 20th trading day after launch, ETHE’s assets under management stood at 70%.

Meanwhile, Bitfinex says the summer launch of the Ethereum ETF, a period of lower trading volumes and weaker investor participation has also contributed to its underperformance and, in turn, the price of the ‘ETH.

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