The spot Ethereum ETF is about to be launched, why did ETH fall in a short period of time?

Recently, the U.S. Securities and Exchange Commission (SEC) took an epoch-making step and approved the issuance of the first batch of Ethereum exchange-traded funds (ETFs). This decision marks that Ethereum has officially entered the regulated financial investment field after Bitcoin.

The approval of the Ethereum ETF constitutes an important milestone for Ethereum itself and the digital asset industry to which it belongs. It not only symbolizes the growing acceptance of Ethereum as an asset class among institutional investors, but also reflects the gradual integration of cryptocurrencies into the vast landscape of mainstream financial markets.

The far-reaching impact of this approval cannot be underestimated. It heralds that investors will be able to access and invest in Ethereum through a more standardized and transparent channel, which is expected to promote the maturity and liquidity of the entire cryptocurrency market.

Spot Ethereum ETF trading officially launched

The U.S. Securities and Exchange Commission (SEC) officially completed the approval of the Ethereum spot ETF for online trading on July 23, bringing new opportunities to the Ethereum market. By then, 21Shares, Bitwise Asset Management Inc., BlackRock Inc., Invesco Ltd., Franklin Well-known financial companies such as Templeton, Fidelity Investments and VanEck have confirmed that they will officially launch online trading of spot Ethereum ETFs on Tuesday (July 23).

The move signals that investors will be able to invest directly in Ethereum through a regulated financial product and is expected to further boost investment activity and liquidity in the market.

This development is the result of a long-term effort to obtain approval for the Ethereum ETF and is a continuation of the road to approval for the Bitcoin ETF. Since the Bitcoin ETF debuted in January this year, it has attracted a large amount of funds from retail and institutional investors.

However, despite the significance of this approval for the market, Ethereum’s price reaction has been surprisingly muted. After the announcement, the price of Ethereum fell instead of rising, falling by 1.32%, and the price once fell to $3,422. This phenomenon is often referred to as the "sell the news" effect, in which the market actually experiences price declines after major news is announced. However, the price of Ethereum then experienced a surge to around $3,500, which seemed to be quickly digested by the high market sentiment.

Matteo Greco, a research analyst at Fineqia, predicted in an interview with the media that ETFs may initially experience outflows, increasing selling pressure in the market.

He noted that Grayscale Ethereum Trust (ETHE) has been trading for years without a redemption option for investors. With the launch of a BTC spot ETF, ETHE may experience similar net outflows to Grayscale Bitcoin Trust (GBTC).

Greco believes that ETHE will eventually become a standalone product of the new Grayscale ETH spot ETF (Ethereum Mini Trust), and its strong initial outflows may be offset by inflows from the new product (Ethereum Mini Trust), similar to this year The pattern for BTC in January.

This market reaction and analyst forecasts provide investors with a perspective on how to adjust their investment strategies in the face of major market news to cope with possible market fluctuations.

Conclusion:

With the approval and online trading of the Ethereum ETF, we have witnessed another important step in the integration of the cryptocurrency market into the mainstream financial system. Although the market initially reacted with a price drop, this may be a short-term adjustment of the market to new financial instruments and also reminds investors to remain vigilant about the volatility of the cryptocurrency market.

At the same time, the introduction of Ethereum ETF is not only a reflection of increased market acceptance, but also a thoughtful layout of future market dynamics. Investors need to comprehensively consider market sentiment, product characteristics and macroeconomic trends to make rational investment decisions. But in the long term, the Ethereum ETF has the potential to become a new engine of growth for the cryptocurrency market.

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