Ethereum
Cryptocurrencies: Ethereum loses 7% – Here’s why
1:00 PM ▪ 4 min read ▪ by Evans S.
Ethereum, the second-largest cryptocurrency by market capitalization, recently experienced a sharp decline of 7%. This sudden decline has raised many questions among investors and market observers. Let’s analyze the reasons for this sharp decline and the factors that contributed to this worrying situation.
The “Sell the News” Effect and the Ethereum ETF
The approval of the Ethereum spot ETF initially seemed promising. Investors hoped that this news would boost the market, as did the Bitcoin ETF made earlier in the year.
However, the initial enthusiasm quickly faded. Indeed, many investors adopted a “sell the news” strategy, selling their positions once the ETF was approved. This caused significant selling pressure in the market, contributing to the fall of the ETH cryptocurrency.
This dynamic is eerily reminiscent of what happened with Bitcoin. Anticipation often leads to a price increase, but the execution of the event frequently sees investors cash in on their gains. A lesson for crypto enthusiasts: anticipate the anticipation.
On-chain data reveals that an Ethereum whale recently sold a substantial amount of its holdings.
According to Point on the chainThis whale deposited 10,000 ETH, worth $34.2 million, on Kraken just before the price crash, making a profit of $173 million. This massive sell-off amplified the selling pressure on the market.
This whale, who withdrew 96,639 ETH from Coinbase in September 2022, appears to have maneuvered his assets wisely. Since March, he has moved nearly 40,000 ETH to Kraken but still holds a sizable stash. These strategic moves highlight the importance of observing the actions of major market players.
Mt. Gox Distributions and Their Impact
10xResearch has highlighted another factor weighing on the cryptocurrency market: the ongoing Mt. Gox distributions. These distributions have increased the overall selling pressure on the market, particularly affecting Ethereum. If this trend continues, the cryptocurrency market will need more support to rebound.
The legacy of Mt. Gox, once the largest bitcoin exchange, continues to haunt the market. Funds recovered from its bankruptcy are slowly being pumped back into the market, creating additional pressure that investors need to watch.
Prominent crypto analyst Michaël van de Poppe suggests that the price of Ethereum could soon reverse its current trend.
According to him, significant outflows from the Grayscale Ethereum Trust could cause a temporary decline, followed by a strong recovery. He predicts a two-week decline before a potential return to new all-time highs.
If this analysis is confirmed, Ethereum could find support around $3,150 before resuming its upward trajectory. Investors should remain vigilant and ready to seize opportunities.
Continued pressure on fundamentals
Ethereum’s fundamentals, such as new user arrivals and revenue generation, are stagnant or declining. This situation makes this crypto particularly vulnerable to market fluctuations. The lack of positive news and significant developments can keep pressure on its price.
Currently, Ethereum is trading at $3,180, after a 7.4% drop in the last 24 hours. With a trading volume of $20.95 billion, the market remains extremely active. Investors should take a cautious approach and monitor market developments closely.
Ethereum is going through a turbulent period, but every crisis brings opportunities. Savvy investors will know how to take advantage of these fluctuations to optimize their portfolios. As always in the world of cryptos, vigilance and reactivity are required.
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Evans S.
Fascinated by bitcoin since 2017, Evariste has never stopped reading up on the subject. While his first interest was in trading, he is now actively trying to understand all the advances centered on cryptocurrencies. As a writer, he aspires to consistently deliver high-quality work that reflects the state of the industry as a whole.
DISCLAIMER
The views, thoughts and opinions expressed in this article are solely those of the author and should not be considered investment advice. Do your own research before making any investment decision.