Ethereum ETF Approval Makes ETH Price Crash

Bittime - The approval of Ethereum [ETH] ETFs has recently gained a lot of attention in the cryptocurrency world. However, instead of having a positive impact, the price of ETH actually experienced a significant decline. This article will discuss why the agreement caused a drop in the price of ETH and how this impacted the market.

Market Reaction After ETF Approval

It is currently the third day since Ethereum ETFs received regulatory approval and the second day of trading. ETH price action so far confirms that this is a “sell the news” reaction. Previously, we explored the possibility of Ethereum ETFs experiencing similar results to Bitcoin ETFs once approved.

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ETH price underwent a correction from the previous rally observed days before the approval. So far, Ethereum ETFs have followed the same pattern.

At the time of writing, ETH price is trading at $3,177, signaling a wave of selling pressure. Prices are currently down more than 10% since the ETF was approved. Previously, ETH was trading at a 21% premium from its July lows after a strong rally 15 days ahead of the ETF approval.

Source: TradingView

ETH Technical Indicators

ETH indicators, especially MACD, confirm that the bullish momentum is losing strength. This indicator is also almost turning negative. The volume strength that will be observed in the next few days will determine whether ETH will extend its bearish momentum.

The RSI shows that there is still room for more selling pressure as it has not yet reached oversold conditions. Our analysis also confirms that the next major support level for ETH is below the $2,900 level.

The Role of Whales in Selling Pressure

The selling pressure that occurred in the last three days suggests that whales may be taking advantage of the liquidity coming from Ethereum ETFs. Lookonchain data confirms that Grayscale moved 140,044 ETH to Coinbase Prime in the last 24 hours, an amount of nearly $500 million. This confirms that whales are contributing to the selling pressure.

Meanwhile, ETH's discounted price may have attracted more buying on the dip. Lookonchain data also revealed that the BlackRock (iShares) Ethereum ETF added 76,669 ETH worth about $262 million to its wallet.

Intensification of Liquidation of Long Positions

Bearish price action indicates that a number of net long positions may experience losses. We confirmed this by evaluating the net long position in HyblockCapital's heatmaps and found that the net long position peaked at nearly 50 million on July 23 at around the $3,500 price level. The heat map shows strong liquidation at that level, which pushed the price down below $3,300 in the same trading session.

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Conclusion

The approval of the Ethereum ETF, which was expected to have a positive impact, actually triggered a massive sell-off in the ETH market. Whales take advantage of the new liquidity while retail investors may react to falling prices. In the coming days, trading volume and selling pressure will be important indicators to determine the next direction of ETH price. Investors need to continue to monitor these developments closely to make wise investment decisions.

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