According to Cointelegraph: Ether's price decline, which has seen a drop of over 26% since the launch of U.S. spot Ether exchange-traded funds (ETFs), is more a reflection of investor sentiment than the impact of ETF outflows, according to Nansen, an on-chain analytics platform. Despite the cumulative $420.5 million net outflows from Ether ETFs since their debut on July 23, the primary factor behind the subdued price action appears to be a lack of risk appetite among investors, influenced by broader macroeconomic conditions.
Aurelie Barthere, principal research analyst at Nansen, explained to Cointelegraph that the decline in Ether’s price is not directly related to the ETF outflows but is more about the general tiredness in risk appetite. Barthere noted, “BTC has been down by 14% since July 23. My reading is tiredness in risk appetite, non-related to the ETF launch.”
Investors had initially hoped for a significant price surge following the launch of Ether ETFs, similar to the impact seen with Bitcoin ETFs, which contributed to about 75% of new investments in Bitcoin by February 2024. However, Ether's price has steadily declined from $3,500 on July 23 to $2,587 as of August 19.
The broader crypto market has been struggling as well, with a recent sell-off wiping out over $510 billion in market value and driving both Bitcoin and Ether prices to five-month lows. Barthere attributed this downturn to external factors, particularly the performance of traditional U.S. equities, rather than a crypto-specific issue. She pointed out that the first sell-off in March led to realized losses among traders, followed by a second sell-off in July and August, influenced by solid yet slowing U.S. economic growth and stretched valuations in traditional risk assets like equities.
Additional factors contributing to the crypto sell-off include the Bank of Japan's unexpected interest rate hike from 0% to 0.25% on August 5. Furthermore, five of the top market makers have sold a total of 130,000 Ether, worth $290 million at current prices, since August 3, coinciding with Ether’s price drop from $3,000 to below $2,200.
Looking ahead, the future of Ether's price will likely hinge on the Federal Reserve’s upcoming monetary policy decisions. Barthere commented, "To me, it is still unclear if we are just taking a consolidation pause or if crypto prices have peaked. If the Fed can cut while growth holds, the bull market in crypto and equities will likely continue. If we get any sharper deceleration in growth, there will be less upside for risk assets."
However, some analysts believe the current crypto bull market could extend until the third quarter of 2025, with firms like Bybit and BlockScholes forecasting Bitcoin’s bull run to last another 350 days based on historical price patterns.
In conclusion, while ETF outflows have played a role, the broader investor sentiment and macroeconomic factors are the key drivers behind Ether's recent price performance.
