When Spot Ethereum ETFs Go Live ‘Expect A Bloodbath’, Says Expert

Thomas
Fahrer,
co-founder
of
Apollo,
a
firm
focused
on
Bitcoin
adoption,
has
issued
a
stark
warning
regarding
the
potential
market
dynamics
following
the
approval
of
spot
Ethereum
ETFs.
As
the
market
anticipates
this
new
development,
Fahrer
suggests
that
the
transition
might
not
be
smooth
for
Ethereum.

“The
Grayscale
Ethereum
Trust
launched
in
2017
and
accumulated
most
of
its
$9
billion
dollars
worth
of
ETH
well
before
staking
existed.
These
funds
will
be
unlocked
now.
Expect
a
bloodbath.
It
will
accelerate
the
ETH
->
BTC
Trade.
Hold
me
to
account
if
I’m
wrong.
But
I
doubt
it,”
Fahrer

declared
via
social
media
platform
X.

Spot
Ethereum
ETFs
–
A
“Sell
The
News”
Event?

The
imminent
approval
of
spot
Ethereum
ETFs,
similar
to
earlier
this
year’s
launch
of
spot
Bitcoin
ETFs,
is
expected
to
convert
the
$9
billion
(approximately
2.94
million
ETH)
locked
in
Grayscale’s
Ethereum
Trust
(ETHE)
into
one
such
ETF.
Historical
precedent
with
Bitcoin
suggests
potential
volatility;
after
the
approval
of
spot
Bitcoin
ETFs,
Bitcoin
experienced
more
than
a
20%
drop
in
value
within
12
days
amid
significant
sell-offs
from
similar
conversions.

Related
Reading

One
of
the
main
reasons
the
spot
BTC
ETF
approval
turned
out
to
be
a
“sell
the
news”
event
was
Grayscale’s
transition
from
an
Ethereum
Trust
to
a
spot
ETF.
Until
now,

Grayscale’s
Bitcoin
Trust
(GBTC)
saw
outflows
of
more
than
50%
of
its
BTC
holdings.
And
the
ETHE
could
be
reinforced
by
the
fact
that
ETH
staking
is
a
lucrative
option
to
earn
an
additional
yield.

Currently,
Grayscale
holds
over
$9
billion
in
locked
Ethereum
that
cannot
be
sold
or
traded
until
the
ETF
is
operational.
Should
the
approval
go
through,
this
large
amount
of
Ethereum
will
suddenly
become
liquid,
potentially
leading
to
substantial
market
sell-offs
if
initial
demand
does
not
meet
the
volume
of
outflows
from
Grayscale’s
new
ETF.

Related
Reading

Julio
Moreno,
head
of
research
at
CryptoQuant,

highlighted
a
critical
market
indicator
that
could
suggest
the
market
has
already
begun
to
react.
“Seems
like
the
market
has
already
priced
the
Ethereum
spot
ETF
approval.
Grayscale’s
ETHE
discount
to
ETH
has
significantly
narrowed
in
the
last
few
days.
The
same
happened
between
GBTC
and
Bitcoin
as
the
Bitcoin
Spot
ETF
approval
was
nearing,”
Moreno
noted
via
X.

While
the
short-term
impact
might
mirror
the
turbulent
times
seen
during
the

Bitcoin
ETF
launch,
the
long-term
implications
for
Ethereum
could
be
different.
Observers
note
that
despite
the
initial
downturns
seen
in
Bitcoin’s
valuation
post-ETF,
the
introduction
of
a
spot
ETF
was
eventually
beneficial,
leading
to
greater
market
acceptance
and
a
price
surge.

“BTC
rallied
75%
in
63
days
after
the
spot
ETF
was
approved.
If
ETH
follows
the
same
trend
(if
approved),
this
would
take
it
to
$6,446
by
July
23,”
crypto
analyst
Miles
Deutscher

noted.

At
press
time,
ETH
traded
at
$3,676.

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