After a 26% surge to $3,563 following the launch of the spot Ether ETF (exchange-traded fund), the Ether (ETH) price has underperformed Bitcoin and the broader cryptocurrency market over the past month. This underperformance has led traders to question whether the altcoin will see a sustained recovery. The ETH price is down 4.3% over the past seven days and down 2.11% over the past month.
To put that into context, the Bitcoin (BTC) price is up 7.7% over the past 30 days, while the overall cryptocurrency market cap is up 6.2% over the same period.
Other top layer-1 tokens, Solana’s SOL (SOL) and Cardano’s ADA (ADA), are up 27% and 6% respectively over the same period.
Several market and technical indicators show that Ethereum is weakening and is likely to post further losses ahead of a sustained recovery.
Ether’s price has lagged behind Bitcoin since May.
The ETH/BTC rate has risen by 5% over the past three days, but has underperformed in the long term, falling by 14% between May 23 and July 30.
There are several reasons for ETH’s current underperformance, some of which are Ethereum-specific, such as outflows from the US-based Ether ETF in 2024.
Additionally, Ethereum’s network activity (a specific metric) has been declining over the past month. According to data from Glassnode, Ethereum’s daily active addresses (DAAs) have decreased from 711,078 on June 22 to 426,472 on July 10.
While Ethereum is still the winning network in the Layer 1 space, Solana has recently gained market share in this space in terms of on-chain metrics such as on-chain activity and total fees.
According to Artemis data, Solana dominates the Layer 1 sector in terms of daily active addresses and daily transaction volume. The Open Network (TON) and Ethereum have been in a fierce competition since May 17, when TON first surpassed Ethereum, and by early June, it had gained a foothold and was ahead of the Ethereum DAA.
ETH Price Drops Due to Spot Ether ETF Fund Outflows
The newly launched Spot ETH ETF has had a contrasting start, seeing inflows of over $1.23 billion since it began trading on July 23. However, these inflows were overwhelmed by net outflows of over $1.723 billion from Grayscale’s Convertible ETHE product.
According to data from Farside Investors, net outflows from spot Ethereum ETFs are now at $440 million.
These gains are consistent with the weekly inflows of $285 million into Ethereum-based investment funds, including U.S. ETFs.
James Butterfill, researcher at asset management firm CoinShares, said Grayscale’s existing trusts continued to see outflows of $1.5 billion this week as some investors cashed out, bringing net outflows to $285 million last week.
Related: Trump’s Bitcoin Push, Spot Ether ETF Debut, and More: Hodlers Digest, July 21-27
Ether Bear Forms Resistance Line at $3,500
The continued outflows from ETH-based funds reflect the negative technical backdrop. In particular, ETH’s recent recovery attempt was rejected by supply stagnation at the $3,500 level, indicating that this area presents a stubborn barrier to ETH’s recovery path.
Data from IntoTheBlock reinforces the importance of this resistance zone. The In/Out of the Money Around Price (IOMAP) model shows that this zone is within the $3,457-$3,557 price range. Around 4.18 million addresses previously bought around 1.93 million ETH in this area.
If there is a surge in short-term seller activity at this resistance level, the Ether price is expected to decline further.
This article does not contain any investment advice or recommendations. All investment and trading moves involve risk, and readers should conduct their own research when making decisions.