Nansen: Ether price dips due to investor sentiment and not $420M ETF outflows

Ether’s price has dropped by 24% since the United States Securities and Exchange Commission approved spot Ether exchange-traded funds (ETFs) in July. However, on-chain analytics platform Nansen claims Ether’s price is influenced by macroeconomic factors and not the net outflows experienced by the ETFs.

The price of ETH has dropped significantly since the United States financial watchdog approved Ethereum ETFs on July 23rd. The digital asset’s price has shed 24% since then and is retailing for $2,653.52 at the time of this publication, down from a high of $3541 on July 23rd. 

Since they were approved, Ether ETFs have witnessed outflows worth $420 million. However, experts believe the net outflows in the spot Ether ETFs are not the driving force behind Ether’s price drop.

Ether’s price drop is due to investor sentiments, not ETF outflows

According to Aurelie Barthere, the principal research analyst at Nansen, ETH’s price is not struggling due to the net outflows on spot Ethereum ETFs. Instead, the researcher believes investors are more cautious about ETH from a macroeconomic standpoint. 

The analyst also related Bitcoin’s 14% shed since July 23rd to a shift in investor sentiment to risk-off and denounced that ETFs are to blame. 

Barthere referenced the recent crypto meltdown that saw a massive sell-off that wiped $510 billion from the 50 largest crypto projects. The sell-off caused Bitcoin and Ethereum prices to drop to lows witnessed five months before the fall. 

The Nansen researcher believes the sell-off was heavily related to the wider equities sector and not primarily driven by crypto-related occurrences. The report also put partial responsibility on the Bank of Japan (BoJ) for its recent economic policy, which hiked interest rates to 0.25%. 

Ethereum also came to the spotlight at the beginning of August when five major market makers cumulatively sold 130,000 ETH worth $290 million, causing the asset’s underlying price to fall from $3,000 to $2,200. 

Since Aug. 3, crypto market makers have deposited 130,000+ $ETH to CEXes, according to 0xScope research.

Over that time, $ETH crashed from $3,000 to $2,100.

Here's a breakdown of their recent deposits: https://t.co/7CYCxVWPtS

Case in point: Jump Trading started dumping $ETH… https://t.co/7xCMotwRK5

— 0xScope (@ScopeProtocol) August 5, 2024

According to data from AI-powered Web3 data provider 0xScope, Wintermute, Jump Trading, and Flow Traders sold most of the ETH at 47,088 ETH, 36,461 ETH, and 3,620 ETH, respectively. GSR Markets and Amber Group trailed behind, selling 292 ETH and 65 ETH, respectively.

Bybit and BlockSchole suggest the bull cycle is not over

Barthere explained that the future of crypto prices depends on the upcoming monetary policies from the United States Federal Reserve. The analysts said that the imminent policies could dictate the end of the current bull cycle or the beginning of a temporary correction.

A report by Bybit and BlockScholes suggests otherwise. The report speculates that the ongoing bull cycle could continue for another 365 days. The analysts made these assertions by comparing the current trough-to-peak ratio in this cycle to the ratio in earlier bull cycles. 

A popular crypto trader and analyst, Rekt Capital, also shared an optimistic outlook with his 490k followers on X, which supports the bullish Bybit and BlockScholes reports. The post highlighted a progress bar referencing the standard halving cycles that showed the market is at 42.5% through the bull market.