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- Ethereum has plunged significantly amid the general ongoing market rout.
- The digital currency’s doom stems from the unabated outflows from Grayscale Ethereum ETF.
Ethereum (ETH) is experiencing a significant downturn. A major market plunge has reduced its price to a 24-hour low of $2,122.55. This trend is not unique to Ethereum; Bitcoin (BTC) and other altcoins are also undergoing intense selloffs.
Based on the law of cause and effect, the plunge in Ethereum’s price is due to several factors, including the selloff in spot ETF products and the volatility in global markets.
Grayscale Liquidation and Price Crash
Just like it did with Bitcoin earlier in the year, the capital outflow from Grayscale Ethereum Trust (ETHE) is a major sell-the-news event to contend with. As of this writing, data from FarSide Investors shows that the total outflows from ETHE have topped $2.1165 billion.
The Grayscale Ethereum Mini Trust (ETH) is also not left behind, with a total liquidation of $511.2 million since inception. It is worth noting that only these two Ethereum ETF products currently have a negative flow. Others, including funds from BlackRock, Fidelity Investments, and Bitwise, have maintained significant inflows, as highlighted in our previous article.
With the unabated negative flows, the price of Ethereum has dropped by more than 20% to $2,345 at the time of writing.
With this price plunge, several important support levels, including the 200-EMA, have been breached. This price level is typically crucial and serves as a support for the coin.
With the fall of Ethereum, the coin is now effectively trading at its lowest point since January before the spot Bitcoin ETF euphoria set in. With the attempt for revival underway, the massive exploitation of the Nomad Bridge may not help matters. According to the on-chain data platform Lookonchain, hackers spent 39.75 million DAI to buy 16,892 ETH. The hacker is sending these ETH to Tornado Cash to prevent them from being tracked.
The association of Ethereum with this scam trend is also helping to dampen sentiments across the board.
What’s Next For ETH?
As discussed earlier, Ethereum has a very high affinity with whale accumulations, with over $440 million in ETH stacked recently. While this whale transaction metric is currently being threatened, the recovery of ETH still depends on it.
Additionally, the broader market trend will serve as a litmus test for how resilient Ethereum is moving forward. Ethereum may need to anchor its recovery on memecoin and DEX hype. However, with growing competition in these key areas amid the Solana takeover, investors and users may have to focus on alternative trends to justify going long on Ethereum.
Overall, Ethereum might have touched its floor price, and chances of a rebound are imminent. The Relative Strength Index (RSI) flashing 18.5 shows ETH is ‘oversold’ and a rebound might be close.
