Ether ETFs Face Tough Competition from Tech Stocks
A crypto analyst has pointed out that while Ether ETFs have gained attention on Wall Street, they now face direct competition from tech stocks. Tech companies are delivering better revenue and higher profit margins, making them more attractive to investors than Ether ETFs.
Despite the buzz around these new ETFs, Ether’s price performance has not been as strong as some had hoped. While many believe Ethereum might hit new all-time highs by the end of 2024, one analyst says it’s unlikely. They argue that Ethereum has not developed a strong narrative to drive its price higher, and tech stocks have taken the spotlight.
However, some traders believe that a price spike for Ethereum could still be on the horizon.
Ethereum Struggles to Compete with Tech Stocks
Nick Forster, the founder of Derive, a crypto derivatives platform and former Wall Street trader, shared his thoughts on the situation. He explained that the launch of spot Ether ETFs has caught Wall Street’s attention, but now Ether competes with tech stocks, which are delivering better revenue and multiples. This has made it harder for Ethereum to stand out as an investment.
Since the beginning of the year, Ethereum’s price has only increased by about 1%. It’s currently trading at around $2,376, according to CoinMarketCap data. In comparison, some of the biggest tech stocks have seen much larger gains during the same period. For example, Nvidia (NVDA) has surged by 122%, and Meta Platforms (META) has gone up by 49%.
Forster believes there’s a slim chance Ether will reach its all-time high of $4,878 by the end of 2024. He says that “it’s possible, but not highly likely.” According to him, three major events would need to happen for this to occur.
Factors That Could Impact Ether’s Price
For Ether to break its all-time high, Forster says three key things would need to line up. The first is Donald Trump winning the United States presidential election in November. The second is the Federal Reserve making aggressive rate cuts to increase liquidity in the market. And finally, there would need to be a broader increase in global financial liquidity.
Without these factors, it’s unlikely Ethereum will see a major price boost, he explained.
While some traders are hopeful for a price surge, others are more cautious. Crypto trader Zen pointed out that the Federal Reserve’s rate cuts could have an unpredictable effect on the market. If the cuts don’t meet traders’ expectations, it could lead to a bearish reaction instead of a rally.
Zen wrote in a post on X (formerly Twitter), “Be careful here. Feds cutting rates by 50 is a new rumor. Market is adjusting prices for that scenario. So, 25 basis point rate cut can become bearish news.”
How the US Election Could Shape Ethereum’s Future
Forster also noted that the upcoming US election could be one of the most significant events in Ethereum’s history. He even said it could have a bigger impact on the asset’s price than the approval of the Ether ETFs.
“There’s an extra bump of volatility implied around the election, with a potential 10-15% move on that day,” he added.
With the election only months away, traders and investors are closely watching to see how it will affect the crypto market. For Ethereum, this could mean larger price swings than usual.
According to Forster, the market is already expecting more significant price changes for Ethereum. Historically, Ethereum’s price has moved by around 2.5-3% each day. But now, the market is pricing in daily moves closer to 3.5%, reflecting the increased volatility around major events like the election.
Is a Price Spike Around the Corner?
Despite Ethereum’s recent struggles, some traders believe the asset is gearing up for a price spike. One of these traders is the pseudonymous Titan of Crypto. In a post on X, Titan of Crypto argued that “an upward move seems just around the corner.”
He pointed to the Relative Strength Index (RSI) as a key indicator. The RSI measures the speed and change of price movements to determine if an asset is overbought or oversold. When Ethereum’s RSI is in or near oversold territory, it often experiences a price rally or a short-term pump, according to Titan of Crypto.
Another trader, Yoddha, shared a similarly optimistic outlook. Yoddha is confident that Ether is “getting ready for five figures” despite the asset’s ongoing consolidation.
Ethereum Whales Are Buying Big
In addition to the optimism from some traders, there has been a surge in buying activity from Ethereum whales. Whale investors, who are known for holding large amounts of Ether, have been adding significant amounts of the cryptocurrency to their wallets in recent weeks.
On September 3, Ethereum’s largest whale wallets added 333,740 ETH, valued at approximately $800 million, according to data from IntoTheBlock. This was the highest single-day inflow of whale purchases since March 13.
Ethereum whales have been on a 20-day buying spree, with each day showing more inflows than sales. August 16 was the last time Ethereum’s largest whale wallets recorded negative flows.
The ongoing accumulation by whales suggests that these large investors are bullish on Ethereum’s future, even as short-term traders remain cautious. Historically, prolonged whale buying trends have often signaled potential bullish movements in Ethereum’s price.
For example, in March 2023, when whale inflows exceeded 370,000 ETH, it drove Ethereum’s price to yearly highs above $4,000. If this pattern repeats, Ethereum could be on the verge of another significant price breakout.
What’s Next for Ethereum?
In the short term, Ethereum faces some challenges. Over the past 10 days, the price of Ethereum has dropped by 15%, falling as low as $2,400. This decline has been driven by selling pressure from short-term traders who are nervous about the upcoming Federal Reserve rate decision and other macroeconomic factors.
However, if whale investors continue to accumulate Ether, the price could find support around the $2,400 level. The Keltner Channel, a technical indicator, shows that Ethereum is nearing the lower band, currently around $2,316.70. This suggests there could be further downside pressure on the asset in the near term.
If Ethereum fails to hold above $2,316, it could see a decline toward the $2,200 mark, which would serve as the next critical support level.
On the other hand, if Ethereum manages to stay above $2,316, it may attempt to break through the immediate resistance at $2,571.77. A successful break above this resistance could open the door for a retest of the $2,826.83 level, which would be a major win for Ethereum bulls.
Long-Term Outlook
In the long term, the ongoing whale accumulation hints at a potential bullish reversal for Ethereum. Historically, similar patterns of whale accumulation have preceded significant price increases. If the broader market conditions improve, particularly if the Federal Reserve cuts rates as expected, Ethereum could see a resurgence in price.
However, much of Ethereum’s future depends on macroeconomic factors and market sentiment. The US presidential election, the Federal Reserve’s rate decisions, and global financial liquidity will all play a role in shaping Ethereum’s price in the coming months.
For now, Ethereum traders and investors will need to closely monitor these key events and market trends. While the short-term outlook may seem uncertain, the long-term potential for Ethereum remains strong, especially with institutional investors like whales continuing to buy the dip.
