Home / Analysis / Crypto / Technical Analysis / Ethereum Uptober on Hold Despite ETH Futures Launch: Is $2,000 Possible?

Ethereum Uptober on Hold Despite ETH Futures Launch: Is $2,000 Possible?

Published October 3, 2023 11:29 AM
Nikola Lazic
Published October 3, 2023 11:29 AM

Key Takeaways

  • ETH ETF launch was unsuccessful as low trading volume
  • Price makes a downturn, decreasing by 6.7%.
  • Chart analysis shows bearish signs.

On Monday, September 2, three U.S. investment firms, ProShares, VanEck, and Bitwise Asset Management, introduced futures-based ETFs linked to Ether, the world’s second most valuable cryptocurrency. These six newly launched funds offered investors their first opportunity to invest in Ether-based exchange-traded products.

However, the launch of these ETFs didn’t seem to generate significant investor interest, and the ETH spot price has declined by 6.77% since then. While these ETH futures ETFs were expected to fuel a substantial price increase, they instead had a negative impact on the price.

Nevertheless, ETH has been in an uptrend since September 11. So, was this decline just a minor setback with $2,000 in its sights, or is it an early indicator that it lacks the strength to sustain its upward trajectory?

ETH Futures ETF’s botch

On the debut day, the combined trading volumes of these ETFs reached $1.92 million. Notably, the ProShares Ether Strategy ETF had the highest trading volume at $878,560, according to data from LSEG .

In an informative X thread , Vetle Lunde, a Senior Analyst at K33Research, shared some statistics about the underwhelming launch day for futures-based ETH ETFs.

He focused on trading volumes and made comparisons with similar product launches, particularly BITI and BITO, which are ProShares Bitcoin ETF products.

ProShares had the highest volume
ProShares had the highest volume

In his initial chart, he highlighted that ProShares dominated the trading volume, accounting for the majority of the first-day trading volume, which totaled $1.96 million across EETH (Ether Strategy ETF) and BETE (Bitcoin & Ether Equal Weight Strategy ETF). VanEck’s EFUT, which launched slightly ahead of its competitors, followed suit.

Low volume seen
Low volume seen

In his following chart, Vetle Lunde compared the day-one volumes of ETH ETFs with ProShares’ Bitcoin Future ETF products. The initial volumes for the ETH ETFs were considerably lower than those of BITO ($1.01B) and BITI ($7.21M) at their respective launches. The ETH ETFs’ day-one volumes represented only 0.19% of BITO’s launch volume and 27% of BITI’s launch volume.

In summary, he acknowledged the differences in market conditions during the BITO and BITI launches but still characterized the launch of ETH ETFs as uneventful.

ETH Price Analysis

In our previous analysis of ETH, we discussed the macro view, highlighting two potential scenarios. One possibility was that the price had initiated a new uptrend by breaking out from the descending resistance level.

The alternative scenario considered the increase from September 11 as a corrective move, suggesting that a new downturn might commence as the price faced rejection at the $1,760 resistance level.

A breakout seen
A breakout seen

Today, we witnessed a 6.7% decline, measuring from yesterday’s high to today’s lowest point of $1,641. To support a potential move towards $2,000, the price needs to form a complete five-wave pattern starting from September 11.

Despite briefly achieving a higher high yesterday, it faced a sharp rejection and is currently testing the September 18 high, which is considered to be the first wave of this pattern.

Point of invalidation
Point of invalidation

Current Pattern May Be Invalid

According to the Elliott Wave theory, it appears that the current pattern may be invalid. First, the assumed wave 3 fell slightly short of its optimum length, but it is still somewhat longer than wave 1, which adheres to Elliott Wave rules.

Wave 4 is typically a consolidative correction, often observed as a sideways movement and should not overlap with wave 2 territory. While it did produce a minor wick on the 4-hour chart, the candle close remained above wave 2. However, given that all three rules are currently stretched, it increasingly resembles a corrective move from September 11.

This could suggest that another downward trend has begun, with the price of ETH potentially heading below its September 11 low and below $1,500. The key determinant of the future outlook is how the price behaves around the $1,660 level. If it manages to stay above and starts moving upward, it could signal the start of an impulse wave.

On the other hand, if the descending move continues, it would indicate that sellers have regained control, potentially leading to a lower low.

Disclaimer

Please note that the contents of this article are not financial or investing advice. The information provided in this article is the author’s opinion only and should not be considered as offering trading or investing recommendations. We do not make any warranties about the completeness, reliability and accuracy of this information. The cryptocurrency market suffers from high volatility and occasional arbitrary movements. Any investor, trader, or regular crypto users should research multiple viewpoints and be familiar with all local regulations before committing to an investment.

 

Was this Article helpful? Yes No