U.S. GDP was strong in the second quarter, but technology stocks continued to be under pressure. In terms of cryptocurrency, Bitcoin returned to above 65K and the trend is relatively stable. Due to the continuous outflow of funds from Grayscale (ETHE), ETH once fell below 3,100, with a 24-hour drop of as much as 4.61%.
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ToggleU.S. GDP is strong and inflation continues to cool
The US second-quarter gross domestic product (GDP) annualized growth rate announced yesterday was 2.8%, higher than the 2.0% forecast by economists.
The PCE price index increased by 2.6% annually this quarter, down from 3.4% in the first quarter. Excluding the volatile food and energy components, the core personal consumption expenditures (PCE) price index was 2.9% in the second quarter, a decline after a 3.7% surge in the first quarter. The core PCE index is the Fed's preferred price measure of inflation.
Grayscale (ETHE) continued to outflow funds, and ETH once fell below 3,100
The Ethereum spot ETF saw a net outflow of US$133 million on its second day of listing. The culprit was Grayscale’s ETHE, which had an outflow of US$810 million in two days. According to data from Farside Investors , ETHE once again experienced a net outflow of US$133 million on the third day (7/25). The outflow of US$346.2 million also caused the sharp drop in Ethereum yesterday. ETH once fell below US$3,100 last night. It pulled back slightly before the deadline and was reported at US$3,178, with a 24-hour drop of 4.61%.
Why is ETHE eager to sell?
According to Bloomberg ETF analyst James Seyffart, who compared the performance of the Ethereum spot ETF and the Bitcoin spot ETF on the first day, he believes that the main difference between the two comparisons is the relatively large outflow of ETHE, because GBTC was still at a meaningful discount when it was launched. GBTC slowly recovered from -6.53% on 1/9 before its launch to -0.11% on 1/22. However, ETHE has risen sharply and approached 0 as early as 5/24, that is, after the approval of Form 19-4b of the Ethereum spot ETF.
In other words, investors who were profitable due to the discount of Grayscale ETHE had already lost the arbitrage space on May 24, but waited for two months before they had the opportunity to sell. Therefore, when the Ethereum spot ETF was listed Only then will they be eager to sell for cash, and this situation may cause ETH to face great selling pressure in the early stage.
Matt Hougan, founder of ETF issuer Bitwise, also believes that Ethereum may be volatile in the first few weeks because of possible outflows after the $11 billion Grayscale Ethereum Trust (ETHE) is converted into an ETF. But by the end of the year, new highs will occur and ETH will have a chance to surpass $5,000.
