Ethereum (ETH) is becoming increasingly scarce, surpassing Bitcoin in this regard. On-chain data from BTC-Echo’s Leon Waidmann reveals that Ethereum’s exchange balance is currently at 10.189%, while Bitcoin’s stands at 15.08%, highlighting a significant trend of decreasing Ethereum availability.
ETF Anticipation Spurs Demand Amid Market Volatility
The growing scarcity of Ethereum is further fueled by the anticipation of a spot Ethereum ETF, which could be approved as early as July 15. Nate Geraci, President of ETFStore, forecasts that the U.S. Securities and Exchange Commission (SEC) will complete its approval process for spot Ethereum ETFs within the next two weeks, possibly even sooner. Major firms such as BlackRock, Fidelity, and Grayscale are preparing for the launch, with Geraci outlining a potential sequence of events leading to SEC approval around July 12.
The market’s excitement around Ethereum ETFs has sparked increased activity, with companies like YieldMax and Hashdex filing for various Ether-based ETFs. This momentum reflects constructive discussions between regulators and ETF providers, potentially paving the way for broader mainstream adoption of Ethereum-based financial products.
Market Sentiment and Price Movements
Despite the positive ETF outlook, Ethereum has faced significant market volatility. Since the start of July, ETH has dropped from $3,400 to $2,800, erasing gains made after the initial ETF approval in May. Ethereum educator Sassal suggests that the recent price drop could be attributed to possible outflows from Grayscale’s ETH trust, ETHE, rather than any fundamentally bearish factors. He remains cautiously optimistic, citing potential regulatory clarity and likely Federal Reserve rate cuts later in the year as positive future developments.
The recent price decline has hit Ethereum harder than Bitcoin, with ETH dropping 14% compared to Bitcoin’s 11% decline. This disproportionate drop has puzzled traders, especially given the expected ETF launch. Some market observers attribute ETH’s steep decline to a lack of a strong narrative and general risk-off sentiment among investors. Negative outflows in the derivatives market, totaling $4.5 billion since July 1, further underscore the bearish sentiment.
Future Outlook
The Ethereum market is closely watching the SEC’s imminent decision, which could significantly impact ETH’s price and market dynamics. The approval of spot Ethereum ETFs could lead to increased institutional investment and broader adoption. However, investors remain cautious, with market sentiment likely to improve only if the Federal Reserve adopts a more dovish stance with interest rate cuts.
In summary, while Ethereum faces short-term volatility and investor caution, the increasing scarcity and potential approval of Ethereum ETFs represent significant milestones that could drive long-term growth and adoption.
