NEW YORK, May 1, 2024 - Ethereum (ETH) faced additional declines on Tuesday, exacerbated by a lackluster debut for Hong Kong's spot Bitcoin and Ethereum ETFs. The underwhelming trading volume for these ETFs, combined with increased long liquidations and mixed whale activity, has contributed to the top altcoin's ongoing struggle.
The first day of trading for Hong Kong's new spot Bitcoin and Ethereum ETFs saw disappointing results, with a total trading volume of only $12 million. This figure pales in comparison to the $4.6 billion in first-day trading volume achieved by Bitcoin ETFs, reflecting a 383-fold difference. The ETFs' poor performance has added to Ethereum's recent woes.
The drop in Ethereum's price has triggered a wave of long liquidations. In the past 24 hours, Ethereum liquidations have surpassed those of Bitcoin for the second consecutive day. Total ETH liquidations reached $91.76 million, compared to Bitcoin's $68.51 million, with ETH long traders alone experiencing $73.62 million in liquidations.
Adding to the market turmoil, asset manager Grayscale transferred 5,626 ETH, valued at $17.83 million, to liquidity provider Flow Traders on Tuesday. This transfer is part of a series of transactions over the past three months, with Grayscale having moved a total of 23,178 ETH worth $71.3 million to Flow Traders.
Despite some whales possibly selling Ethereum in the short term, data from Glassnode shows a decline in ETH's exchange supply, which is decreasing even faster than Bitcoin's. This trend is supported by recent massive ETH withdrawals from exchanges like Binance, suggesting that many investors are holding onto their Ethereum in anticipation of a long-term rally.
Justin Sun, founder of the Tron blockchain and known for his whale purchases of Ethereum, has commented on the progress of Ethereum staking and restaking protocols. Sun believes these protocols will evolve into operational entities supporting blockchain networks globally, which may explain his recent ETH acquisitions.
With Ethereum's price slipping below the critical $3,000 level on Tuesday, the market is awaiting a significant price trigger. The disappointing ETF trading volume in Hong Kong has intensified the decline. However, long-term bulls' exchange withdrawals could act as a support to prevent Ethereum from falling below the $2,852 level.
If Ethereum manages to stay above this support level, it could potentially recover and address recent market inefficiencies. A successful rebound might push ETH past the $3,300 level and tackle inefficiencies around $3,454, a level formed on April 12. This optimistic outlook could be disrupted by a significant macro event affecting the broader crypto market.