The price of Ethereum, the world's second-largest crypto, has seen a sharp drop in recent days. Experts are pointing to a phenomenon of investor capitulation, amplified by macroeconomic factors.
A spectacular drop due to massive sales
Ethereum’s recent plunge has caught many investors off guard. Renowned analyst Michael Van de Poppe attributes the plunge to a market capitulation. This phenomenon is characterized by massive, panicky selling, often signaling the end of a bear market cycle.
” Since the launch of Ethereum spot ETFs, we have observed notable weakness in ETH” , explain From Poppe.
According to this expert, the massive outflows from Grayscale's Trust ETHE weighed heavily on the price. Indeed, more than $400 million were withdrawn on the first day of listing of the ETFs, a figure that stabilized around $60 million by the end of the week.
Jump Trading’s strategy also played a crucial role. The company reportedly liquidated over $500 million worth of Ethereum in just two days after the launch of the spot ETFs. These significant sales added to the downward pressure on ETH’s price.
Van De Poppe believes that ” This severe correction suggests that the downtrend is coming to an end” .
An unfavorable macroeconomic context for the entire crypto market
The fall of Ethereum is part of a tense economic and geopolitical climate. Van de Poppe highlights several aggravating factors:
- Political uncertainty in the United States, with a potential rise of Kamala Harris in the presidential polls.
- The escalation of the Israeli-Palestinian conflict, marked by the death of a Hamas leader in Iran.
- Disappointing economic data, particularly on the US labour market, fuelled speculation about future rate cuts.
- A black day for the Japanese stock market, reminiscent of the crash of 1987.
Despite this gloomy picture, Van de Poppe sees this capitulation as a potentially positive sign. I would rather see such a sharp correction, as it suggests that the downtrend is coming to an end.” he says.
This capitulation phase could therefore mark a low point, opening the way to a technical rebound of Ethereum in the coming weeks.
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