Bitcoin’s recent decline below $60,000 raises concerns for U.S. spot Bitcoin ETFs, while Ethereum ETF approval anticipated by mid-July 2024 offers hope for market stabilization and potential price rally.
Bitcoin Dips Below $60K, ETFs at Risk of Liquidations
Bitcoin, the world’s largest cryptocurrency, has seen a significant decline over the past four weeks, falling by 14%. Currently trading around $60,200, it briefly dipped below the critical $60,000 mark on Friday morning. Analysts at 10x Research, including founder Markus Thielen, warn that this price level is crucial for U.S. spot Bitcoin ETFs, which have an average entry price between $60,000 and $61,000. A sustained break below this range may trigger a wave of ETF liquidations.
Since their inception on January 11, 2024, the 11 U.S. spot Bitcoin ETFs have accumulated over $14 billion in net inflows. According to Thielen, 30% of these inflows are part of a non-directional arbitrage strategy known as the basis trade, rather than outright bullish investments. Recent market dynamics, including fast sales by miners, old wallets, Germany’s crypto holdings divestment, and potential reimbursements from the defunct exchange Mt. Gox, have contributed to Bitcoin’s recent price decline.
Spot Ethereum ETF Approval Anticipated by Mid-July
The cryptocurrency industry is poised for a significant development with the possible approval of a spot Ethereum ETF in the United States by mid-July 2024. Insights from Nate Geraci, President of The ETF Store, and Steve Kurz, Head of Asset Management at Galaxy Digital, suggest that the U.S. Securities and Exchange Commission (SEC) may approve the ETF soon. Amended S-1 forms are expected by July 8, with potential final S-1s by July 12, indicating a likely launch around July 15.
This anticipated move is seen as a stabilizing factor for Ethereum prices, currently hovering around $3,353. Analysts are optimistic about a potential rally towards $4,000, contingent on Ethereum maintaining its current price levels. The approval process involves significant groundwork laid in collaboration with the SEC, modeled after Galaxy Digital’s existing spot Bitcoin ETF (BTCO).
ETH’s performance amid this speculative period will be crucial, with price stability around $3,300 to $3,350 essential for a potential breakout to $4,000 in the near term. Analysts draw historical comparisons to Ethereum’s long consolidation phase during 2016-2017, suggesting that persistence and optimism could lead to significant price rallies.
