- ETH could rise 90% to $6.5k if it follows Bitcoin’s post-ETF trend.
- Demand for ETH from US investors was still low, changing market sentiment.
Ethereum [ETH] fell from $3.5k to $3k two days after the US spot ETH ETF launched, a drop of about 8%. At the time of writing it was slightly higher than $3.2k.
But a market observer, Croissantclaimed that ETH’s price action following the ETF’s launch mirrored that of Bitcoin [BTC] pattern after US spot BTC ETFs went live in January.
If the correlation continues, ETH could fall to $2.7,000 in two weeks before surging 90%, the analyst said.
“Ethereum is following the exact same trajectory as Bitcoin after the ETF was approved. -8% ($3143) two days after approval
-20% ($2749) two weeks after approval, +90% ($6547) two months after approval.”
Source: X/Croissant
It meant that ETH could reach $6.5k in September. That’s a rally of more than 90% in two months.
For perspective, BTC dropped from $48,000 to $40,000 after the BTC ETF launched. Two months later, the largest digital asset exploded to $73,000 in March.
Another renowned analyst, Crypto Kaleoagreed with the forecast.
Can ETH soar 90% and reach $6.5k in two months?
However, it is worth noting that correlation does not always equal causation. Put another way, ETH mirroring the BTC pattern after ETF doesn’t necessarily mean the outcome could be the same.
That said, as most analysts have predicted, ETH could benefit from the Fed’s expected rate cuts in September. This could boost all risky assets, including crypto.
Meanwhile, ETH underperformed BTC during its spot ETF debut week, as evidenced by the ETHBTC ratio falling over 6% on a weekly basis at the time of writing.
Source: ETH/BTC, TradingView
A drop below the mid-level, near 0.045, could weaken ETH even further against BTC.
According to Andrew Kang of Mechanism Capital, there actually was one high risk of ETHBTC drops to 0.04 or lower, which would make it unattractive as a hedge.
“At that point (below 0.04 ETHBTC) I don’t believe $ETH will be such an interesting hedge anymore.”
The risk Kang was referring to was that of the US spot ETH ETFs. net outflow in the past two days. The products saw outflows of $133 million and $152 million on July 24 and 25, single-handedly driven by Grayscale’s ETHE hemorrhage.
Source: Fairside Investors
However, Daniel Yan of Kryptanium Capital was hopeful that the 0.045 level would soften ETHBTC’s decline. The jury is still out on whether ETHBTC will fall further.
In the meantime, according to CryptoQuant’s head of research, YES Marchunna compelling bullish reversal for ETH could occur as strong demand emerges from US investors.
At the time of writing, US demand was still low, as evidenced by the low Coinbase Premium Gap.
Source: CryptoQuant