Ethereum May Be Headed For A Sell-Off After ETFs Launched: 10x Research

A new 10x Research report suggests investors approach Ethereum ETH/USD with caution, suggesting the ETF launch might trigger a sell-off rather than a sustained rally.

What Happened: Despite the initial excitement, 10x Research research points out that historical patterns suggest a potential market correction following such launches.

They note that similar events, from the Bitcoin futures launch in December 2017 to the recent Bitcoin spot ETF debut, have typically led to price corrections shortly after.

The report highlights several factors that could dampen enthusiasm for Ethereum ETFs:

1. Limited marketing efforts by ETF issuers, potentially resulting in lower retail and institutional interest.
2. A relatively low annualized funding rate for Ether futures (7-9%), which may not attract significant arbitrage flows from institutions.
3. Ethereum’s staking yield of just 3.12%, which is less attractive in the current high-interest-rate environment.
4. Stagnant growth in Ethereum network activity, with user numbers similar to those from three years ago.

Technically, the analysts suggest that Ethereum’s price, currently trading around $3,500, might be overbought according to the stochastics indicator.

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They propose a stop-loss at $3,560 for any short positions.

Interestingly, the report also touches on the growing narrative that this cycle might favor Solana over Ethereum, citing higher active user numbers for Solana SOL/USD (14.2 million vs. Ethereum’s 7.5 million).

For investors looking to capitalize on these market dynamics, 10x Research suggests considering a long Bitcoin vs. short Ether strategy, or using options to sell ETH calls and buy Bitcoin calls.

The approval of Ethereum ETFs, which came after the Securities and Exchange Commission (SEC) gave the green light to exchange applications in May, has been highly anticipated in the crypto community.

This development follows the successful launch of Bitcoin spot ETFs in January, which have accumulated over $54 billion in assets under management.

What’s Next: As the crypto landscape continues to evolve rapidly with these institutional-grade investment vehicles, industry professionals and enthusiasts alike will be eager to discuss the implications at the upcoming Benzinga Future of Digital Assets event on Nov. 19.

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