Ethereum experiences largest drop in three months despite U.S. ETF Launch

On Thursday, the cryptocurrency Ether fell by 5.8% amid a broad market sell-off and failed to get the expected lift from the launch of the first U.S. ETFs tracking its value.

As of writing, the world’s second cryptocurrency had dropped 5.8% to $3,142, according to Tradingview, marking the largest daily percentage drop in the last three months. Despite this decline, Ether remains within its recent trading range. Bitcoin also fell by 2% to $64,096.

Changes in Inflows and Outflows Affect Ether: Current Situation Analysis

Despite positive inflows into eight spot Ethereum-ETFs, investors continue to withdraw funds from the Grayscale fund. Since its transformation, the trust has lost $810 million. According to SoSoValue, the net outflow from spot Ethereum products was $133.2 million, indicating participants’ uncertainty. The largest inflow was recorded by Fidelity with over $74 million, followed by Grayscale's Ethereum Mini Trust, which attracted over $45 million.

However, despite these inflows, the overall outflow left bearish sentiments, reflecting on the rate of ETH. In contrast, spot Bitcoin-ETF saw a positive inflow trend with $44.5 million.

Market and Macroeconomics: Global Factors Influence

Earlier, QCP Capital experts noted that the traders’ reaction to the launch of ETH-based exchange products was "muted." On the day of the debut, July 23, initial enthusiasm quickly waned.

The situation was further complicated by Mt.Gox compensation payments and the macroeconomic backdrop. Payments began after a series of transactions that saw 48,641 BTC worth over $3 billion moved. 10x Research analysts concluded that the sharp pullback in Ethereum after the spot ETF launch signals new problems, repeating the pattern observed with BTC-based exchange products.

In recent weeks, global stocks, especially tech stocks, have experienced significant declines, which also impacted cryptocurrencies.

On Wednesday, the Nasdaq lost 3.6%, following disappointing reports from Alphabet and Tesla.

Mining companies also fell on Thursday's pre-market sessions: Riot Platforms and Marathon Digital dropped by 3.4-4%. European stocks also fell by 1.4% on Thursday.

Forecasts and Prospects: Experts' Opinions

Experts believe many traders expected ETH-ETF to "capture" 20% of BTC-ETF inflows but underestimated the "sell the news" rule. The quick sell-off of "initial investments" indicates a lack of confidence in sustained growth.

Despite current bearish sentiments, QCP Capital and BRN analysts predict a gradual increase in inflows into Ethereum ETF.

Future Developments: New Products and Forecasts

Hashdex has applied with the SEC to launch a combined fund based on Bitcoin and Ethereum. Initially, the product will interact only with these two digital assets, but the firm may add other cryptocurrencies later, considering the Securities Act standards.

The expert Javon Marks made a positive forecast regarding Ethereum Name Service (ENS). He believes its price will significantly increase and has already begun to rise. He estimates the altcoin will reach $76.12, demonstrating strength and determination.

This situation underscores the volatility of the cryptocurrency market and its susceptibility to macroeconomic changes and market sentiments. Despite the launch of Ether ETFs, investors continue to closely monitor global trends and economic indicators that significantly impact cryptocurrency values.