Ethereum’s price has taken a significant hit recently, dropping below the $3,000 mark. This decline has raised concerns among Ethereum bulls as the cryptocurrency struggles to maintain its value. One of the contributing factors to this drop is the outflows experienced by Spot Ethereum ETFs since their inception on July 23. Data shows that these funds saw a net outflow of $54.3 million on August 2, adding to the selling pressure on Ethereum.
The launch of these funds has not had the desired impact on ETH’s price, with Ethereum down over 10% since they began trading. In total, these funds have experienced cumulative net outflows of $510.7 million, with Grayscale’s Ethereum Trust (ETHE) being a significant contributor to these outflows. This continuous selling pressure has contributed to Ethereum’s price falling below $3,000, exacerbated by the broader downtrend in the crypto market led by Bitcoin.
The correlation between Ethereum and Bitcoin prices has also played a role in Ethereum’s recent decline. Data indicates a strong price correlation between the two assets, meaning that Ethereum was bound to experience a significant drop following Bitcoin’s decrease in value. While the drop below $3,000 is concerning for investors, historical data suggests that Ethereum has quickly rebounded from this support level in the past.
Looking at Ethereum’s revenue, data from Token Terminal reveals a significant drop in revenue over the last 30 days, down by 40.4% annually. Additionally, fees earned on the network have also declined, with users paying 32.8% less in fees over the last 30 days. This drop in revenue can be attributed to a decline in the network’s active daily users, with a decrease seen in monthly, weekly, and daily active users.
At the time of writing, Ethereum is trading at around $2,979, reflecting a 5% drop in the last 24 hours. If Ethereum fails to hold this range, there is a risk of it dropping further to $2,700, a crucial support level for the cryptocurrency. Despite the current challenges facing Ethereum, data suggests that there is strong demand for the cryptocurrency at this price level, which could potentially support its price in the near future.
In conclusion, Ethereum’s recent price drop below $3,000 has sparked concerns among investors, but historical data and demand at this price level may provide some support to the cryptocurrency. As the broader crypto market continues to fluctuate, it remains to be seen how Ethereum will fare in the coming days and weeks. Investors are advised to conduct their own research and consider the risks involved before making any investment decisions in the volatile crypto market.