By skyforbes 
Key Points
- Ethereum (ETH) experienced a significant price drop despite the anticipated launch of an ETF.
- The decline was more severe than Bitcoin’s (BTC), baffling some market observers.
Despite the potential launch of an exchange-traded fund (ETF) by mid-July, Ethereum (ETH) wasn’t immune to the current market downturn.
The digital asset, which ranks second in terms of market capitalization, lost over $500 since July 1st. It fell from $3.4K to a low of $2.8K, negating all gains made after partial ETF approval in May.
Ethereum educator Sassal, however, argued that apart from potential outflows from Grayscale’s ETH trust, ETHE, there were no other bearish factors.
ETH’s Decline Surpasses BTC’s
Despite Sassal’s hopeful outlook, the recent market crash hit ETH harder than Bitcoin (BTC). At the time of writing, BTC had decreased by around 11% over the week, while ETH had declined by 14%.
This disproportionate drop surprised some traders, particularly given the upcoming launch of the ETH ETF. Some market analysts suggested that ETH’s steep fall was due to a lack of a compelling narrative. Another observer, Evans, proposed that the market was risk-averse and that potential ETHE outflows could impact the ETH ETF’s prospects.
Bearish Sentiment in the Market
In the meantime, ETH’s pullback reached the golden zone at the 61.8% Fibonacci retracement level, based on the 2024 lows and highs. Whether this support level holds could be influenced by Bitcoin’s next move.
The risk-averse sentiment among investors was further highlighted by negative outflows in the derivatives market. Since July 1st, ETH has experienced net outflows totaling $4.5 billion, emphasizing the bearish sentiment and potential tepid reception to the ETF launch.
A recent Bloomberg report suggested that the sentiment in the crypto market could only improve if the Federal Reserve becomes more dovish and implements one or two interest rate cuts.