Ethereum (ETH) extended its selloff on August 5, plunging to just above $2,100, an eight-month low. Jump trading in ETH transfers, rising geopolitical tensions, and concerns about the health of the global economy have triggered corrections across all markets.
According to data from Cointelegraph Markets Pro and TradingView, ETH fell from a high of $3,016 on August 3 to a low of $2,116 on August 5, a drop of around 30%.
The last time Ethereum traded at these levels was on January 3, when it was rallying on expectations that the first Bitcoin exchange-traded fund (ETF) would be approved in the United States.
On August 5, the price of Ethereum fell by as much as 22%, the largest one-day drop since May 2021. It was revealed that popular market maker Jump Trading had moved $315 million worth of ETH tokens to an exchange to liquidate its cryptocurrency positions.
Ethereum Investments Lose Over $146 Million Amid Recession Fears
As Ethereum falls to $2,100, analysts are concerned that further outflows could push the price below $2,000.
According to an August 5 report from CoinShares, cryptocurrency investment funds saw their “first outflows in four weeks” in the week ending August 3, with investors withdrawing more than $528 million.
Crypto asset management firms have seen massive outflows due to fears of a global economic downturn, which has resulted in “$10 billion in total assets under management being wiped out from ETPs.”“
CoinShares analyst James Butterfill said:
“We believe this is a response to fears of a U.S. recession, geopolitical concerns and the resulting broad-based market liquidation across most asset classes.”
Negative sentiment was mainly focused on Bitcoin (BTC) and Ether, the largest cryptocurrencies by market cap, which lost $400 million and $146.3 million respectively.
Since the US-based spot Ethereum ETF launched on July 23, net outflows from Ether investment products have now reached $430 million.
“The data overshadowed $430 million in positive inflows from newly launched US ETFs last week, but was offset by $630 million in outflows from existing Grayscale trusts.”
According to data from SoSo Value, the spot Ethereum ETF recorded a total outflow of $229.77 million during the week of July 29 to August 2, compared to inflows of $60.42 million.
Related: Forget the Ethereum ETF. Here’s What You Can Do Instead
Ethereum’s On-Chain Activity Drops
The Ether price crash also coincides with a decline in network activity, as evidenced by the number of new and active addresses. According to data from The Block, the number of new addresses for later-1 tokens has been decreasing over the past month, with the steepest decline occurring between July 27 and August 3, from 93,840 wallets to a year-to-date low of 82,540.
The average number of active addresses on the Ethereum network also decreased by 13.5%, from 486,740 on July 5 to 421,259 on August 2.
The network’s daily transaction volume also plummeted from 1.17 million on July 6 to 1.11 million on August 4.
The recent decline in these metrics following the launch of a spot ETH ETF in the US suggests that some investors prefer to gain exposure to Ether through funds rather than buying and owning tokens directly.
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.