Ethereum price has remained in a strong bear market this month amid negative headlines from the crypto industry’s largest blockchain. ETH was trading at $2,360 on Friday, down more than 42% from its year-to-date high. It is also hovering near its lowest point since February of this year.
Ethereum ETF Fund Outflows
The first big headline is that Ethereum exchange-traded funds (ETFs) are not doing well two months after their launch.
Data compiled by SosoValue shows that these funds have seen cumulative outflows of over $582 million since their launch. This week, they have seen outflows for the past two consecutive days, with the Grayscale Ethereum Trust (ETHE) being the hardest hit.
ETHE has over $4.1 billion in assets, down from over $10 billion when it launched. It is followed by the Grayscale Mini Ethereum Fund (ETH), which has over $889 million in assets due to its lower expense ratio. The Blackrock Ethereum ETF (ETHA) has $800 million while the Fidelity Ethereum ETF (FETH) has $323 million.
There are two main reasons why Ethereum ETFs aren’t gaining traction among investors. First, they’re relatively expensive. Grayscale’s ETHE has an expense ratio of 2.5%, which is one of the highest in the ETF industry. Its ETH ETF, on the other hand, has a lower expense ratio of 0.15%, which is why it’s become more popular among investors.
Second, unlike Bitcoin, Ethereum has a feature called staking, where users deposit their coins and earn monthly rewards. Data from StakingRewards shows that Ethereum has a staking reward of 3.22%.
Therefore, investors who allocate their money to Ethereum will do much better than those who buy ETFs. An annual yield of 3.22% means that an investor who invested $10,000 in Ether can expect to earn $322, which is an excellent return.
It is worth noting, however, that the amount of Ethereum staked has been on a downward trend in recent weeks, mainly due to the price drop. Data shows that over 298,000 ETH worth over $703 million has left staking pools.
Ethereum has formed a death cross
The other reason why ETH price dropped is that the coin formed a death cross chart pattern as the 200-day and 50-day exponential moving averages (EMAs) formed a bearish crossover pattern.
In most cases, a death cross is one of the most popular bearish patterns in the financial market. It often leads to a significant decline in an asset. In fact, Ether has already fallen by more than 15% since this cross occurred.
Ethereum also formed a double top chart pattern with a neckline at $2,815, its May 1 low. The double top is another popular bearish sign in the market. ETH also crashed below the 61.8% Fibonacci retracement level.
Therefore, the ETH token is likely to remain under pressure in the coming weeks, especially if it falls below the key support at $2,150, its lowest point this month.
Internal sales are up
The other main reason why Ethereum price fell is because insiders sold ETH tokens aggressively.
Vitalik Buterin, the network’s creator, has been on a selling spree, selling nearly $10 million worth of tokens in recent weeks.
Similarly, the Ethereum Foundation has also seen a major sell-off. In most cases, investors often sell assets when insiders sell, because they think they know something that the broader market doesn’t.
At the same time, open interest in futures contracts has been on a sharp downward trend in recent weeks. It stood at more than $10 billion on Thursday, compared to more than $17 billion earlier this year. This is a sign of waning demand among investors.
On the positive side, there are signs that the number of Ethereum tokens on exchanges is on a downward trend. They stand at over 22.61 million, according to Nansen data. This is a decrease of 0.86% compared to the same period last week.
The days of Ethereum being the only player in the market are over. While it holds the largest market share in key areas, other networks are catching up.
More recently, Tron, led by Justin Sun, launched SunPump, whose crypto tokens have a market cap of over $608 million. Sun, the largest DEX on Tron, has seen a surge in activity.
Other networks are gaining market share. Base, the layer 2 network launched by Conbase, has attracted millions of wallets from around the world. Other fast-growing Ethereum competitors are Solana and Arbitrum. Solana has become a key player in the DePin industry.
This competition has attracted more investors to these projects. For example, Tron was trading at $0.15, a few points below its all-time high. At the same time, the volume of Ethereum NFTs has dropped sharply in recent months.
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