Ethereum price has fallen for two consecutive days, erasing most of the gains of the past three weeks.
Ethereum (ETH) price fell to $3,145 on Thursday, its lowest level since July 13 and 11% below its high point this week.
Why is the price of Ethereum falling?
This decline occurred despite the recent approval by the Securities and Exchange Commission of Ethereum exchange-traded funds and their strong performance.
On Wednesday, these funds traded around $852 million compared to $1.1 billion for Bitcoin, which means there is strong demand among investors. Data from BlackRock The data shows that ETHA has over $269 million in assets, while the Bitwise Ethereum ETF (ETHW) has $230 million in assets.
Ethereum’s value has fallen for three reasons. In a note, Michael van de Poppe, a popular crypto analyst, pointed to ongoing liquidations from the Grayscale Ethereum Trust (ETHE), a fund with a 2.50% expense ratio.
As with the Grayscale Bitcoin ETF, many investors have sold their holdings and moved them to cheaper funds. For example, an ETHE investor with $100,000 in assets will pay a fee of $2,500, while an investor in the Grayscale Mini Ethereum ETF (ETH) will pay just $150.
Therefore, Michael believes that the price of Ethereum may soon decline further and then rise again when the outflows from Ethereum ease. He expects the coin to jump to a record high when these outflows end.
Buy the rumor and sell the news
Second, the price of Ethereum drops as investors sell off on the news since the token’s value soared before approval. In most cases, assets rise before a major event and then fall when it happens. This happened after Bitcoin’s recent devaluation, Bitcoin ETFs Approved In January, the Ripple v. SEC case was ruled on.
Finally, the decline is in line with the ongoing price action of Bitcoin (BTC). Bitcoin, the largest cryptocurrency in the industry, has been falling for four consecutive days, leading to a deep sell-off among other altcoins like Avalanche (AVAX) and Jasmy.
Despite the ongoing decline, there is a positive case to be made for Ethereum. It is the world’s second-largest cryptocurrency, has a long history of outperforming Bitcoin, and has strong utility, says BlackRock’s Jay Jacobs.
Ethereum remains the most active blockchain network. It handles the most stablecoin transactions, has the most assets in the DeFi industry, and makes the most money. Data from Symbolic station It shows that it has generated over $1.7 billion in fees this year, which is double what Tron (TRX) and Bitcoin combined have generated.