Ethereum price recovery from 8-month low could take longer than expected — Analysts
2024.08.05 15:53
Ether (ETH) extended its slump on Aug. 5, plunging to eight-month lows just above $2,100, as ETH transfers by Jump Trading, rising geopolitical tensions and concerns about the health of the global economy triggered a correction in all markets.
Data from Cointelegraph Markets Pro and TradingView shows that ETH fell from a high of $3,016 on Aug. 3, dropping approximately 30% to a low of $2,116 on Aug. 5.
ETH/USD daily chart. Source: TradingView
The last time Ether traded around this level was on Jan. 3, during an uptrend fueled by the anticipation of the first spot Bitcoin exchange-traded funds (ETFs) being approved in the United States.
On Aug. 5, Ether’s price fell as much as 22%, the largest one-day decline since May 2021. It emerged that popular market maker Jump Trading moved $315 million of ETH tokens to exchanges as it prepares to unwind its crypto positions.
Ethereum investment products shed over $146 million due to recession fears
As Ether dropped to $2,100, analysts fear that additional outflows could potentially drive prices below $2,000.
According to an Aug. 5 report by CoinShares, crypto investment funds saw “outflows for the first time in 4 weeks” during the week ending Aug. 3 as investors withdrew more than $528 million.
Weekly inflows into crypto investment products. Source: CoinShares
The crypto asset management firm attributed the large outflows to fears of a global recession, which “saw US$10bn wiped off total ETP AuM.”
CoinShares analyst James Butterfill said,
“We believe it is a reaction to fears of a recession in the US, geopolitical concerns and consequent broader market liquidations across most asset classes.”
The poor sentiment was mostly focused on the two largest cryptocurrencies by market capitalization, Bitcoin (BTC) and Ether, which saw $400 million and $146.3 million outflows, respectively.
Flows by asset. Source: CoinShares
Net outflows from Ether investment products have now reached $430 million since the market debut of US-based spot Ethereum ETFs on July 23
“This data masks the positive inflows of US$430m last week from the newly launched US ETFs, but offset by US$603m outflows from the incumbent Grayscale trust.”
According to data from SoSo Value, spot Ether ETFs saw a total of $229.77 outflows against $60.42 million inflows during the week of July 29 to Aug. 2.
Total spot Ethereum ETF flows. Source: SoSo Value
Related: Forget about Ethereum ETFs — Here’s what you can do instead
Ethereum’s onchain activity slumps
The crash in Ether’s price also coincides with a decline in network activity, as evidenced by the number of new and active addresses. According to data from The Block, the number of new addresses on the later-1 token has been dropping over the last month, with the sharpest decline witnessed between July 27 and Aug. 3, from 93,840 wallets hitting year-to-date lows of 82,540.
The average number of active addresses on the Ethereum network has also dropped by 13.5% from 486,740 on July 5 to 421,259 on Aug. 2.
New and active addresses on Ethereum. Source: The Block
Daily transactions on the network have also plunged from 1.17 million on July 6 to 1.11 million on Aug. 4.
Number of daily transactions on the Ethereum network. Source: The Block
The decline in these metrics following the recent launch of spot ETH ETFs in the US is an indication that some investors prefer gaining exposure to Ether through the funds rather than directly buying and owning the token.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
