Ether Price Drop 20% After Spot ETFs Launch: Impact on Liquidity

Ether Price Drop and ETF Outflows: What Crypto Investors Need to Know

Ether’s Price Drop – Since the introduction of spot ether exchange-traded funds (ETFs) in the U.S. on July 23, the 5% market depth for ether (ETH) on U.S. exchanges has decreased by 20%. This reduction in liquidity is attributed to poor market conditions and seasonal effects, according to CCData.

Before the approval of these ETFs, CoinDesk reported in December 2023 that ETFs were expected to enhance market liquidity, making it easier to execute large buy and sell orders at stable prices. While this liquidity boost was observed in the bitcoin (BTC) market following the debut of spot ETFs on January 11, ether’s story has been different.

Decline in Ether’s Order Book Liquidity

Data tracked by London-based CCData indicates that the average 5% market depth for ETH pairs on U.S.-based centralized exchanges has fallen to approximately $14 million. This represents a 20% decline since the ETFs’ debut. On offshore centralized venues, the market depth has dropped by 19% to around $10 million. This decline means it is now easier to move the spot price by 5% in either direction, signaling reduced liquidity and increased sensitivity to large orders.

Jacob Joseph, a research analyst at CCData, noted in an interview with CoinDesk that while market liquidity for ETH pairs on centralized exchanges remains higher than at the beginning of the year, it has fallen by nearly 45% since its peak in June. Joseph attributes this drop to poor market conditions and seasonal effects during the summer, which typically see lower trading activity.

ETF Outflows and Ether Price Decline

Since the launch of the spot ether ETFs, the cumulative outflow has exceeded $500 million, according to data from Farside Investors. Concurrently, ether’s price has decreased by over 25%, reaching approximately $2,380, as reported by CoinDesk.

FAQ: Ether’s Market Depth Decline Post-Spot ETFs