Ethereum, the largest altcoin by market capitalization, experienced a momentary dip, dangling precariously over the edge of the $1,600 mark before staging a marginal recovery to $1,650, as per data from CoinMarketCap. At the time of writing, ETH is trading at roughly $1,630. While this temporary drop in price has sparked concerns, it has also raised the possibility of Ethereum testing the $1,500 price threshold, a level that could be reached sooner than expected due to the prevailing market sentiment.
Over the past week, ETH witnessed losses extending over 2%, leading to the liquidation of $10 million in long positions as exchange outflows surged. Notably, October saw the largest outflows in over six weeks, with a remarkable drop of 110,000 ETH in exchange supply within 24 hours. Market experts are urging caution, stating that a break below $1,585 may lead to further losses, potentially hitting mid-August lows at $1,551.
These developments occurred in the wake of the recent launch of VanEck’s Ether Futures ETF, which, unfortunately, generated minimal trading volume, indicating a lack of immediate institutional interest in Ethereum. Typically, institutional demand acts as a stabilizing force during market downturns, making this lack of enthusiasm a concern for the cryptocurrency community.
Additionally, the highly anticipated debut of nine new Ethereum futures exchange-traded funds (ETFs) on October 2 fell short of expectations. The total trading volume of these funds amounted to only 0.2% of the volume achieved by the ProShares Bitcoin Strategy ETF [BITO] during its launch in October 2021. While it was anticipated that Ether ETFs might not match the initial success of Bitcoin ETFs, the figures were far from encouraging.
Ethereum’s Dramatic Drop In Transaction Fees
On a positive note, ETH gas fees experienced a significant decline, reaching levels not seen in nearly a year. According to Santiment, the average cost of settling transactions over the week was just $1.13, a substantial decrease from the previous highs observed in May. Lower gas fees are expected to enhance the Ethereum network’s utility, potentially attracting more decentralized applications and smart contracts. This, in turn, could exert upward pressure on the price of ETH in the days to come.
That being said, it’s important to underscore that Ethereum’s price is inherently volatile and subject to rapid fluctuations. Despite the momentary setbacks, traders and investors have maintained a bullish outlook on ETH’s long-term prospects. This weighted sentiment for the asset reflects the resilience and belief in the token’s fundamental strength, suggesting that the community remains optimistic about the cryptocurrency’s future performance.