Key Points:
- Ether fell sharply due to a sell-the-news reaction post-ETF launch, erasing nearly two weeks of gains.
- Significant outflows from Grayscale’s Ethereum Trust and other ETFs have added to the decline, showing a shift toward lower-fee alternatives.
- The Mt. Gox reimbursem*nts and a tech market selloff have further pressured Ether's price amid a challenging earnings season.
In this article:
- Ethereum-3.69%
Ethereum’s native token, Ether (ETH), has dropped sharply today due to multiple factors impacting the market, ranging from a growing sell-the-news sentiment to the ongoing Mt. Gox reimbursem*nt.
From a technical perspective, Ether’s losses are part of a correction pattern within a descending channel. For instance, in May 2024, ETH’s price pulled back after testing the channel’s upper trendline as resistance and went on declining toward the lower trendline at around $2,850.
ETH/USD daily price chart. Source: TradingViewIf the fractal repeats, ETH is highly likely to return to $2,850. The following fundamental indicators further this bearish outlook.
1. Sell-the-News Reaction Post-ETF Launch
ETH’s price has plummeted by around 8.75% in the last 24 hours, reaching approximately $3,170 on July 25.
This downturn followed the launch of eight spot Ether ETFs on the New York Stock Exchange, erasing nearly two weeks of prior gains. This suggests a classic “sell-the-news” reaction, where investors sell off their assets following a highly anticipated event despite the news being positive.
Bitcoin had suffered a 20% decline after the launch of its nine ETFs in January, suggesting the same selling sentiment could prevail in the Ethereum market next, clearing its way toward the $3,000 level.
2. Ethereum ETFs Witness Net Outflows
Ether’s decline was further exacerbated by $113.3 million in outflows from spot Ether ETFs on their second trading day, primarily due to hundreds of millions of dollars in withdrawals from Grayscale’s Ethereum Trust (ETHE)
While seven of the eight newly launched spot Ether ETFs saw net inflows, Grayscale’s Ethereum Trust experienced a staggering $326.9 million in outflows, indicating a shift in investor preference toward lower-fee alternatives.
Nonetheless, more outflows from ETHE ETF could keep the overall net flows negative in the coming days, akin to what Bitcoin witnessed after the launch of its nine ETFs in January. That will most likely pressure Ether’s price toward $3,000.
3. Mt. Gox Bitcoin Reimbursem*nts
The ongoing Mt. Gox Bitcoin reimbursem*nts have also contributed to today’s Ether losses.
Crypto exchanges Kraken and Bitstamp have begun repaying approximately 127,000 Mt. Gox creditors, who are owed over $9.4 billion worth of Bitcoin. If met with lower demand, this new supply of Bitcoin could lead the BTC prices lower in the near future.
That will likely influence ETH’s price due to its high correlation with Bitcoin.
4. Broader Tech Market Selloff
A broader tech market selloff has compounded Ether’s decline. Plummeting megacap technology shares led the US stock market to its worst day since 2022 on July 24, dampening sentiment across asset classes, including cryptocurrencies.
The sharp global declines in tech stocks mark a reversal from the earlier frenzy, particularly around artificial intelligence, which had driven most equity gains this year. This downturn highlights the severe penalties investors are imposing on companies that miss earnings targets.
“The US tech earnings season is off to a poor start, with 40% of the market capitalization reporting next week,” noted Markus Thielen, founder of 10x Research, adding that “guidance will be more conservative as consumer spending takes a hit.”
Excerpts:
“If this trend continues, crypto will need more help to rally. Ethereum might be the weakest link, where fundamentals (new users, revenues, etc.) have been stagnant or lower.”
5. Liquidations in the Ethereum Futures Market
The Ethereum futures market has seen $117.76 million worth of long liquidations in the past 24 hours, the highest across the crypto market.
This liquidation process, triggered when the market moves against long positions, causes a sell-off of assets, increasing selling pressure and amplifying the downward momentum.
Nearly $598 million worth of long positions risk liquidation if the ETH price drops toward $3,000, according to the Coinglass liquidation map.
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About the Author
Yashu Golaauthor
Yashu Gola is a journalist focusing on cryptocurrency markets since 2014. He writes for Cointelegraph and CoinChapter and has previously served as the chief editor for NewsBTC.
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