The price of Ether (ETH) has stumbled significantly since the launch of U.S.-based spot Ether exchange-traded funds (ETFs) on July 23, plummeting over 26% from $3,500 to $2,587. Despite the substantial $420.5 million in net outflows recorded by these ETFs since their inception, market experts argue that the primary driver behind Ether’s decline is a broader lack of investor enthusiasm rather than ETF-related factors.
Aurelie Barthere, principal research analyst at the on-chain analytics platform Nansen, provides critical insight into this phenomenon. In an interview with Cointelegraph, Barthere emphasized that the downturn in Ether’s price is not directly tied to the ETF outflows. Instead, she points to a general “tiredness in risk appetite” among investors as the root cause. This sentiment is reflected in Bitcoin (BTC) as well, which has seen a 14% decrease since the ETF launch.
Investor expectations surrounding the Ether ETFs were initially high. Historically, Bitcoin ETFs have significantly influenced market dynamics. For instance, ETFs accounted for approximately 75% of new Bitcoin investment when it surged past $50,000 earlier this year. However, Ether has not followed the same trajectory. The price drop highlights a divergence in market reactions between different cryptocurrencies.
The current crypto market downturn is also part of a broader sell-off impacting traditional U.S. equities. In early 2024, the market witnessed a staggering $510 billion sell-off that drastically affected the top 50 cryptocurrencies, bringing both Bitcoin and Ether prices to five-month lows. Barthere attributes this broader sell-off to a correlation with traditional equities and ongoing concerns over U.S. economic growth and valuation stretches in traditional risk assets.
In addition to the equities market volatility, recent decisions such as the Bank of Japan’s interest rate hike on August 5 have further contributed to the global financial turbulence. The rate increase from 0% to 0.25% has added to the uncertain economic landscape, influencing investor behavior across various asset classes.
Moreover, the activity of major market makers has exacerbated the situation. Since August 3, top market makers have liquidated approximately 130,000 Ether, worth $290 million at current prices. This large-scale selling has added downward pressure on Ether’s price, which crashed from $3,000 to below $2,200.
Also Read: Donald Trump Holds 492.72 Ethereum And $989,500 In WETH – Inside His $3.4 Million Crypto Investments
Looking ahead, the current state of the crypto market raises questions about whether this is merely a temporary correction or a signal of the end of the bull market. Barthere suggests that future price movements will largely depend on forthcoming U.S. Federal Reserve monetary policy decisions. Meanwhile, some market analysts remain optimistic, projecting that the current bull market could extend into the third quarter of 2025. Bybit and BlockScholes, for example, predict that Bitcoin’s bullish trend may continue for another 350 days based on existing market metrics.
As the crypto market navigates these turbulent waters, investor sentiment and macroeconomic factors will play crucial roles in determining the future trajectory of Ether and other digital assets.
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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