The price of ether (ETH) recently hit an eight-month low, raising concerns that a recovery could take longer than expected.
The catalysts for the fall of the ether
On August 5, the price of ETH plunged to a low of $2,100. A 22% drop marked the altcoin’s largest single-day decline since May 2021. This meteoric decline is mainly attributed to several strategic and macroeconomic moves, including Jump Trading’s notable transfer of $315 million worth of ETH to exchanges.
Indeed, this transaction was seen as a precursor to an imminent liquidation of their positions. On the other hand, the mood in the crypto market was darkened by escalating geopolitical tensions and growing concerns about a global recession. These factors have caused massive corrections across financial markets, increasing pressure on ether.
Crypto Asset Recovery: A Road Full of Pitfalls
The ETH debacle has affected Ethereum investment products, with significant capital outflows. According to a report from CoinShares dated August 5, crypto investment funds have recorded their first net outflows after four weeks of inflows. Investors withdrew more than $528 million during the week of August 3.
Meanwhile, Ethereum’s on-chain activity is showing a decline. The number of active and new addresses on the blockchain has been decreasing, according to data from The Block. Between July 27 and August 3, it dropped from 93,840 to 82,540. Daily transactions on the network have also declined, from 1.17 million on July 6 to 1.11 million on August 4. This decline in metrics comes after the recent launch of Ethereum ETFs in the US. This suggests that some investors are preferring to gain exposure to ether through funds rather than buying the crypto asset directly.
Currently, the ETH price is looking to break through the $2,500 mark. However, the prospects for a quick recovery in the price of the crypto asset remain uncertain. Some analysts even see the asset falling to $2,000. In short, the road to recovery could be long.
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