ethereum price has fallen for two consecutive days, erasing most of the gains from the past three weeks.
ethereum (eth) price retreated to $3,145 on Thursday, its lowest level since July 13 and 11% below its highest point this week.
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Why is ethereum price falling?
This pullback came despite the Securities and Exchange Commission's recent approval of ethereum spot ETFs and its strong performance.
On Wednesday, these ETFs were trading at around $852 million compared to bitcoin's $1.1 billion, meaning there is strong demand among investors. ethereum-trust-etf” target=”_blank” rel=”nofollow”>Blackrock Data shows that ETHA has over $269 million in assets, while Bitwise ethereum ETF (ETHW) has $230 million in assets.
ethereum has fallen for three reasons. In a note, Michael van de Poppe, a popular cryptocurrency analyst, pointed to ongoing liquidations in the Grayscale ethereum Trust (ETHE), a fund with an expense ratio of 2.50%.
As with Grayscale’s bitcoin ETF, many investors have sold their holdings and moved them into cheaper funds. For example, an ETHE investor with $100,000 in assets will pay a fee of $2,500, while one in Grayscale’s Mini ethereum (eth) ETF will pay just $150.
Therefore, Michael believes that the ethereum price could pull back a bit soon and then recover when ETHE outflows subside. He expects that the coin could reach an all-time high when these outflows end.
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Buy the rumor, sell the news
Secondly, the price of ethereum is falling as investors sell the news since the token rallied ahead of approval. In most cases, assets rise before a major event and then pull back when it happens. This happened after the recent bitcoin halving, The approval of bitcoin ETFs in January and the ruling in the Ripple vs. SEC case.
Lastly, the drop aligns with bitcoin’s (btc) current price action. btc, the industry’s most important cryptocurrency, has fallen for four consecutive days, triggering a sharp sell-off among other altcoins such as Avalanche (AVAX) and Jasmy.
Despite the continued decline, it can be argued that ethereum is bullish. It is the second-largest cryptocurrency in the world, has a long history of outperforming bitcoin, and has great utility, as BlackRock's Jay Jacobs said.
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ethereum remains the most active blockchain network. It handles the most stablecoin transactions, holds the most assets in the decentralized finance industry, and generates the most money. Data from Token Terminal shows it has earned over $1.7 billion in fees this year, double what Tron (TRX) and bitcoin have earned combined.
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