Ether Price Plummets: ETF Launch and Supply Surge Contributing Factors
Ether Price Plummets– Ether (ETH) has experienced a notable downtrend, with its price falling over 24% in the past month. As of August 19, 10:11 am UTC, ETH was trading at $2,572, according to Cointelegraph. This significant drop comes despite the much-anticipated launch of the first Ether-based exchange-traded funds (ETFs) in the United States.
ETFs and Their Unexpected Impact on Ether’s Price
Despite the historical debut of Ether ETFs, which were expected to drive the price up, the reality has been quite different. The ETFs have faced a considerable net outflow, with $420.5 million recorded since their launch. This substantial outflow has added extra selling pressure on Ether, contrary to initial expectations.
Comparing ETF Impacts: Bitcoin vs. Ether
For Bitcoin (BTC), ETFs played a crucial role, accounting for approximately 75% of new investments by February 15, helping it surpass the $50,000 mark. In contrast, Ether’s performance has been lackluster, raising questions about the efficacy of ETFs in boosting its value.
Rising Ether Supply: Another Factor in Price Decline
Since the launch of the spot Ether ETFs on July 23 in the US, the supply of Ether has surged. The total supply increased by 60,555 ETH, worth over $155 million at the time of writing, as per Ultrasound.money data. This rise has resulted in a supply growth rate of 0.61% per year over the past 30 days, with an annual issuance rate of 940,000 ETH and a burn rate of 203,000 ETH. This increase in supply could be contributing to the price decline.
Ethereum’s Dencun Upgrade: Potential Long-Term Benefits
Ethereum’s most significant upgrade since the Merge, the Dencun upgrade, went live on March 13. This upgrade aims to significantly reduce transaction fees on layer-2 networks and enhance Ethereum’s overall scalability. While this upgrade holds promise for the future, its impact on Ether’s price in the short term remains to be seen.
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