Buy the Rumor, Sell the News?? - Ethereum ETF Thoughts

24 mag

Why isn't ETH pumping right now? Here are some possible reasons:

• No capital inflow: The ETFs haven't started yet, so there's no fresh capital inflow.
  
• Early buyers: Since the SEC decision earlier this week, many have already bought what they wanted.
  
• Regulatory hurdles: Only the 19b-4 filings were approved today, not the S-1 forms. In contrast, the Bitcoin ETF approval had the S-1 forms ready, allowing for a quick trading start.
  
• Delegated authority: The approval by "delegated authority" could still be challenged within the next 10 days.
  

A comparison with the BTC ETF launch:

• Price increase Q3 last year: Much of it due to speculation that a spot BTC ETF was imminent.
  
• Market volatility from Cointelegraph post: Notorious events like the Cointelegraph posts on October 15 caused significant market volatility.
  
• Serious discussions in January: Suddenly, it became likely that the ETF would be approved that month.
  
• BTC ETF approval: The SEC approved the BTC ETF on Wednesday, January 10.
  
• Immediate +5% pump: An immediate +5% pump, followed by a significant selloff that lasted almost 2 weeks and severely impacted the market.
  
• Recovery and new ATH: BTC recovered around 39k and almost doubled to a new all-time high.
  

Possibility for Ethereum:

• Buy the Rumor: Massive price increases in anticipation of the event.
  
• Sell the News: Market downturn as the event is already priced in.
  
• Delayed Fuse: Long-term bullishness is processed by the market over a longer period.
  

Summary and Conclusion: While the exact behavior of the market is not 100% sure, historical patterns show that such events often follow predictable cycles. The "Buy the Rumor" phase leads to significant price increases, followed by a "Sell the News" reaction once the event occurs. Long-term, a "Delayed Fuse" phase may occur, where the market processes the long-term positive impacts of the event. The Ethereum ETF could play a crucial role in establishing Ethereum as a significant asset in the long term. With increasing acceptance and institutional interest, we could see sustainable price increases and broader adoption of Ethereum-based applications. The potential for DeFi (Decentralized Finance) and smart contracts could be further promoted by the ETF.