The recent launch of spot Ethereum ETFs was supposed to be a game-changer. However, it seems investors are more interested in Bitcoin, leaving Ethereum in the dust.
The first week of trading saw Ethereum’s price drop from $3,563 to $3,086, echoing the Bitcoin spot ETF launch.
So, why did this happen? One big reason is Grayscale’s 2.5% fee on their Ethereum ETF. This steep fee is driving investors away.
In just four days, there were $178 million in net outflows from the eight ETFs, with Grayscale alone responsible for $1.16 billion of that.
Even with a new Mini ETF offering a lower fee of 0.15%, the net outflows continued, with only 10% of the original ETHE converting to ETH.
Ethereum’s struggle to stand out
QCP’s latest analysis says another issue is the classic “buy the hype, sell the news” situation.
Investors piled in before the ETF launch, hoping for a big rally. But when that didn’t happen, they quickly sold off their holdings.
Ethereum’s main problem is its abstract nature. Unlike Bitcoin, which is often called digital gold, Ethereum doesn’t have a simple tagline that appeals to traditional finance folks.
This makes it harder for new investors to understand and get excited about. Another drawback is the lack of staking features in these ETFs. Staking is a big part of Ethereum’s appeal, offering rewards to holders.
Without it, there’s less incentive for investors to buy in. This has led to a lukewarm reception for the spot Ethereum ETFs, despite the initial excitement.
Bitcoin steals the spotlight
While Ethereum was busy struggling, Bitcoin stole the show in the options market. The excitement’s now all about Donald Trump’s speech, which had everyone in the market on edge.
QCP says implied volatility for options expiring on July 28 was at 85, almost double the realized volatility, showing how much anticipation there was.
Big funds were placing bets on a big move, with some positioning for a breakout after Trump’s speech and the upcoming Federal Open Market Committee (FOMC) meeting.
One bullish strategy, dubbed “The Trump Card,” involved selling a 65k put and buying a 70/72/74k call fly. If Bitcoin hits $72k by August 2, investors could see a return of 701.9% per year.
There was also a bearish strategy, “Sell The News,” aiming to profit if Bitcoin ended up between 65k and 63k. QCP says this approach would offer a 3x return on the premiums spent if Bitcoin lands within this range.
Adding to the excitement, a crypto trader named Jelle pointed out a massive descending broadening wedge forming around Bitcoin’s previous cycle highs. According to Jelle, if Bitcoin breaks out, it could sharply move to $85,000.
At the time of writing, Bitcoin was priced at $67,829, while Ether was at $3,248.