The crypto market witnessed a brutal weekend, with Ethereum (ETH), the world’s second-largest cryptocurrency, taking a significant blow. Its price plummeted, dragging down the entire crypto space and sparking concerns about the future.
Popular crypto analyst Michael Van De Poppe believes a phenomenon called “capitulation” is the key culprit behind the recent price action. Capitulation refers to a period of intense selling pressure, often driven by panic and despair among investors. Van De Poppe, sharing his analysis on X (formerly Twitter), pointed to a massive sell-off fueled by fear, causing ETH’s dramatic collapse.
Interestingly, Van De Poppe highlights the long-awaited approval and listing of spot Ethereum Exchange-Traded Funds (ETFs) as a potential turning point. He suggests that instead of the anticipated boost, ETH has displayed unexpected weakness, reaching a new six-month low.
Grayscale’s Trust ETHE Outflows Cast A Shadow
Van De Poppe delves deeper, suggesting that outflows from Grayscale’s Ethereum Trust (ETHE) following the launch of spot ETFs might be a contributing factor. These outflows, exceeding $400 million on the first day and currently hovering around $60 million, have arguably weakened the product and, by extension, ETH itself.
Jump Trading’s Liquidation Fuels the Fire
Another factor Van De Poppe identifies is Jump Trading’s aggressive liquidation strategy. The company reportedly offloaded over $500 million worth of ETH in just two days, continuing this trend throughout the weekend. This significant selling pressure undoubtedly contributed to the downward spiral.
Capitulation A Sign of Things to Come?
Despite the concerning developments, Van De Poppe offers a potentially optimistic outlook. He views the recent events as a form of capitulation, a harsh correction marked by steep losses in a short timeframe. Historically, such corrections have often signaled the end of a downtrend.
Also Read: Ethereum Shows Resilience – 15% Rally Defies Market Crash, Can It Sustain Gains?
While capitulation, outflows, and liquidations appear to be the primary drivers, Van De Poppe acknowledges the broader global context. Ongoing geopolitical tensions, economic anxieties, and recent market crashes haven’t helped matters, likely accelerating ETH’s decline.
The jury is still out on whether Ethereum’s price has reached its bottom. However, Van De Poppe’s analysis suggests that the intense selling pressure might be easing, potentially signifying the end of the current downtrend. Only time will tell if this is a temporary setback or a more lasting shift in the market.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
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