Markets
Bitcoin Price Outperforms Broader Cryptocurrency Market, Ether (ETH) Price Drop Mirrors Bitcoin (BTC) ETF Launch
Bitcoin (BTC) outperformed the broader cryptocurrency market during the trading day in Asia, adding 4.4% to test $67,000 while the CoinDesk 20 Index (CD20) increased by 3.3%.
CoinGecko data shows Solana’s SOL jumped more than 5%, leading gains among major tokens, with ether (ETH)BNB Chain’s BNB and Cardano’s ADA Add 3%. Dogecoin (DOGE) rose 4%, while Solana-based memecoin popcat (POPCAT) jumped more than 8%, leading gains in that category.
For a third day, ether products led liquidations in cryptocurrency futures, with over $70 million in long positions liquidated, compared to $55 million in BTC-based futures.
Open interest, or the number of futures bets that have not yet settled, fell by $1 billion in the past 24 hours, a sign that money is leaving the market.
Bitcoin exchange-traded funds (ETFs) added a net $31.16 million, bringing cumulative net inflows since their inception in January to just under $17.5 billion, according to data from SoSoValue. Total ETF net assets amount to $59.14 billion, or about 4.6% of the largest cryptocurrency’s entire market cap.
Ether, the second largest, rose 2.8% to above $3,200, according to CoinDesk Index DataEther ETFs saw a daily net outflow of $152 million, SoSoValue data shows. The current cumulative flow for ETFs since they began trading this week is negative $178.68 million. This is primarily due to withdrawals from Grayscale Ethereum Trust (ETHE), which was converted into an ETF.
“This situation is very similar to the launch of the Bitcoin ETF product earlier this year,” CoinShares analysts said in an emailed note.
Outflows from Grayscale Bitcoin Trust (GBTC), the world’s largest bitcoin fund at the time, which converted from a closed-end structure to an ETF that allowed redemptions for the first time in 10 years, weighed on bitcoin’s price in the early weeks. Inflows into rival funds later overcame the downtrend, pushing BTC to an all-time high in March.
Grayscale Ethereum Trust is following the same path, but faster, making the decline a “prime buying opportunity,” said Mads Eberhardt, a cryptocurrency analyst at Steno Research.
“If this trend continues, the outflow from the Grayscale Ethereum ETF could end much more quickly than it did for Bitcoin in January, perhaps as early as the middle of next week,” Eberhardt said. “After that, we estimate we will see a strong net inflow, driven by inflows into other ETFs, as we have seen in recent days.”
Rachel Lin, CEO and co-founder of SynFutures, disagrees, saying she expects ETH traders to face short-term difficulties.
“As we have seen with Bitcoin, Grayscale’s ETH ETF fund is becoming a net seller in the market with over $810 million outflow since the ETF’s launch,” Lin said in an email to CoinDesk.
“Grayscale currently holds over $8 billion in Ether, and nearly 10% of that has been sold in the last two days alone. If the trend continues, Grayscale could hit 50% much sooner than Bitcoin. However, this would also mean further downside for Ethereum.”
Looking away from BTC and ETH, AAVE, the native token of Aave decentralized finance The (DeFi) protocol surged 15% as the market reacted to a proposed token buyback.
The proposal, which is currently in a “temporary control” phase where feedback is sought, would help generate more revenue for the protocol by buying back AAVE tokens from the secondary market and redistributing them to stakers.