4 months ago
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10X Research identified Ethereum as a weak link in the crypto market, noting that its fundamentals, including user growth and revenue, have been stagnant or declining.
The recent rally in crypto markets, driven by the anticipation of the Ethereum (ETH) ETF launch, appears to be losing steam. According to a series of tweets by 10x Research, the current surge has followed a familiar pattern of “sell-the-news” events, as seen in previous crypto market cycles.
Market Patterns and ETH Weakness
10x Research noted that the rally leading up to the Ethereum ETF launch echoed past events, including the Bitcoin futures launch in December 2017, the Coinbase listing in April 2021, and various Bitcoin ETF listings. Each event initially sparked significant market enthusiasm, only to be followed by notable corrections. This trend seems to be repeating, with Ethereum highlighted as a particularly vulnerable asset.
“The rally into the Ethereum ETF launch is finally over,” stated 10x Research. “All crypto listings have seen a ramp-up into the launch, only to become a sell-the-news trading opportunity.”
10x Research pointed out that the Ethereum ETF launch coincided with the distribution of Bitcoin from Mt. Gox, potentially increasing selling pressure. Additionally, a weak start to the US tech earnings season, with significant companies like Alphabet and Tesla experiencing substantial sell-offs, has added to the market’s bearish sentiment.
Stagnant Fundamentals
10x Research identified Ethereum as a weak link in the crypto market, noting that its fundamentals, including user growth and revenue, have been stagnant or declining. Prior to the ETF launch, they expressed a bearish outlook on Ethereum, considering it overbought and predicting a strong short trade opportunity. Since their report, Ethereum has already declined by 6%.
“Crypto will need more help to rally. Ethereum might be the weakest link, where fundamentals (new users, revenues, etc.) have been stagnant or lower,” 10x Research wrote.
While there is still optimism among some market participants, the challenges highlighted by 10x Research suggest that the crypto rally lacks the necessary momentum to be sustainable in the long term, especially for Ethereum.
Current State of the Market
The broader cryptocurrency market has been under pressure, with a 2.3% drop in Bitcoin over the past day, now trading at $64,320. This decline follows a slight recovery over the weekend when Bitcoin briefly surpassed $68,000. Despite the downturn, some market indicators remain bullish. TradingView’s 1-day technical analysis shows a “buy” signal for Bitcoin, with the moving averages also indicating a “buy”. However, oscillators remain neutral.
ETH, along with other crypto assets, also saw significant declines. Newly launched US-based spot Ethereum ETFs showed mixed results. Ethereum faced substantial outflows from Grayscale’s converted Ethereum Trust ETF (ETHE), which experienced net outflows of $810 million. The SEC’s approval of ETH ETFs initially led to a rise in ETH futures open interest and prices. However, the historical trend of corrections post-ETF launch seems to continue.
The lack of sustainable catalysts could mean that further corrections are likely unless new positive developments emerge.
