10x Research: Post-ETF Era, Where Will ETH Price Go?
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10x Research: Post-ETF Era, Where Will ETH Price Go?
"We tend to go long on BTC and short ETH."
Navigating Web3 tides with focused insightsBy: 10x Research
Translated by: Azuma, Odaily Star Daily
Editor's note: In the early hours of July 23 (Beijing time), the U.S. Securities and Exchange Commission (SEC) officially approved spot Ethereum ETFs, allowing multiple funds to begin trading on Tuesday. However, perhaps because market expectations for ETF approval had already been priced in, ETH’s price did not show significant movement following the SEC announcement. At the time of writing, ETH was trading at 3,442.62 USDT, down 1.3% over the past 24 hours.
Currently, one of the most closely watched issues is the future trajectory of ETH’s price—especially whether inflows from the newly launched ETFs will provide a boost once trading begins tomorrow. Could there be a potential "sell the news" scenario, where positive catalysts lead to subsequent declines? On these questions, the market-prediction-focused investment firm 10x Research has once again released its analysis on ETH’s outlook.
Below is the full translation of 10x Research’s original report, brought to you by Odaily Star Daily.
Let us first review the approval journey of the spot Ethereum ETF.
On May 20, the SEC unexpectedly requested exchanges to update their Form 19b-4 filings, signaling substantial progress in the ETF application process. Markets responded immediately, raising the probability of approval from 25% to 75%.
On May 23, the SEC formally approved the Form 19b-4 filings for spot Ethereum ETFs, resolving the biggest hurdle ahead of launch.
In the seven days that followed, open interest in Ethereum futures surged from $8.8 billion to $13 billion, while ETH’s price climbed from $3,065 to a short-term peak of $3,959.
This morning, the SEC completed final approval for spot Ethereum ETFs, permitting them to commence trading tomorrow. We have witnessed similar milestone events before—the launch of Bitcoin futures in December 2017, Coinbase’s IPO in April 2021, the debut of Bitcoin futures ETFs in October 2021, and the introduction of spot Bitcoin ETFs in January 2024. All were followed by short-term corrections.
Now, traders are constantly asking us whether ETH will follow a similar path…
Although ETH briefly rose to $3,959 at the end of May, it fell below $3,000 in early July—a clear sign that traders lack confidence in sustained upward momentum. While ETH had recovered to $3,500 prior to ETF approval, we suspect many investors will take profits immediately after launch—or even before.
Moreover, marketing efforts around spot Ethereum ETFs have been relatively muted, which could directly dampen retail and institutional interest. BlackRock CEO Larry Fink recently made public appearances, but only promoted Bitcoin—not Ethereum. This suggests that, at least initially, BlackRock’s clients may show limited appetite for ETH.
At the time of the spot Bitcoin ETF launch, annualized funding rates in the futures market approached 15%, peaking at 70% in February, attracting significant arbitrage flows. Traders would buy the ETF shares and hedge with futures, capturing risk-free yield. This buying pressure amplified bullish sentiment around BTC.
Currently, annualized funding rates in the Ethereum futures market stand at just 7–9%. This offers little incentive for arbitrage firms, especially when factoring in capital costs—at minimum the 5% federal funds rate. Compared to Bitcoin ETFs in February, spot Ethereum ETFs are unlikely to attract substantial arbitrage inflows, weakening overall optimism toward ETH.
Note: Ethereum Stochastics Indicator (above 90% indicates overbought conditions).
From a technical standpoint, ETH’s Stochastics Indicator is nearing overbought territory, suggesting a favorable opportunity to short. We would use the recent high of 3,560 as a stop-loss level.
Alternatively, we prefer a pairs trade—going long on BTC while hedging with a short on ETH—rather than outright shorting ETH. Practically, traders could sell put options on Ethereum while buying call options on Bitcoin. However, options remain expensive: implied volatility for contracts expiring September 27 stands at 65%, while 30-day realized volatility is only 50%, indicating a significant premium in implied volatility.
In terms of market chatter, discussion around Solana clearly surpasses that of Ethereum this cycle. Solana’s ecosystem has become the epicenter of meme coin mania, while Ethereum missed out due to high gas fees. Numerous data points support Solana’s stronger engagement—for instance, Solana currently has 14.2 million active addresses compared to Ethereum’s 7.5 million…
Ethereum’s market dominance peaked at 18.4% a month ago but has since declined to 17.0%. Lack of interest is also reflected in persistently flat gas prices. Although the Dencun upgrade in March 2024 significantly reduced network fees, transaction volumes have stagnated, and active address counts remain similar to levels seen three years ago—indicating minimal growth for the Ethereum network.
In the zero-interest-rate environment of previous years, Ethereum’s staking yield was a key driver behind the DeFi Summer of 2020–2021. Today, however, Ethereum’s staking yield has dropped to just 3.12%, with Coinbase offering only 2.91%. While the ETFs themselves do not include staking, the opportunity cost remains a critical factor behind weak demand for ETH in this cycle.
Compared to BTC, ETH’s beta (price sensitivity to broader market moves) is also weakening. Since the start of this bull run, ETH has consistently underperformed; since October 2022, ETH has trailed BTC by 40%.
Considering all these factors—ETF issuers’ lack of aggressive marketing, traders taking profits post-announcement, and potential outflows from Grayscale’s Ethereum Trust—there are solid grounds for a bearish view on ETH, at least in the near term.
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