The recent decline in the price of Ethereum (ETH) has had a significant impact on the market, with a 26% reduction since July 23. The prominent role of the substantial $420.5 million outflow from ETFs in contributing to this drop has been acknowledged, but there is evidence suggesting that the fluctuation in ETH’s price is more closely tied to investor sentiment.

Principal analyst Aurelie Barthere of Nansen emphasized that the decrease in risk appetite among investors is the primary factor behind the recent price decline, rather than the ETF outflows. Similar trends in Bitcoin, with a 14% decline in the same time period, indicate a general fatigue among investors, rather than a specific reaction to the launch of ETFs.

Contrary to initial expectations, the introduction of ETFs on Ethereum did not lead to a surge in its price, with Ether plummeting from $3,500 to $2,587 by August 19, catching many investors off-guard.

The recent sell-off in cryptocurrencies, including Ether and Bitcoin, has been influenced by the dynamics of the U.S. stock market, as well as the increase in interest rates by the Bank of Japan and significant Ether sales by major market makers.

The future movement of Ether’s price will depend significantly on the decisions made by the Federal Reserve. A potential reduction in interest rates, together with sustained economic growth, could reignite the cryptocurrency rally, although there are differing opinions among experts.

Another contributing factor to Ethereum’s price decline is the increase in its supply, with over 60,555 ETH, valued at over 155 million dollars, added in the 30 days following the debut of spot ETFs in the U.S.

Despite the upgrade of Ethereum in the Dencun update and the approval of ETFs, the price of Ether has continued to suffer, dropping by 35% while the supply increased by over 197,000 ETH.

Some experts are hopeful about a potential breakout in the price of Ether in the first quarter of 2025, with historical chart patterns indicating the possible conclusion of the consolidation phase in November or December 2024, paving the way for a possible parabolic growth at the beginning of 2025.

In conclusion, while the recent price decline of Ethereum has been influenced by various factors, it is clear that investor sentiment plays a significant role in the cryptocurrency market. The future movement of Ether’s price remains uncertain, with all eyes on the decisions of the Federal Reserve and the potential breakout in 2025.

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