Ethereum’s native token, Ether (ETH), has seen a sharp decline of approximately 8.75% in the past 24 hours, reaching around $3,170 on July 25. This downturn comes a day after the launch of eight spot Ethereum exchange-traded funds (ETFs) on the New York Stock Exchange, highlighting a classic “sell-the-news” phenomenon in the crypto markets.
Sell-the-News Reaction
The “sell-the-news” strategy typically involves investors offloading assets immediately after a highly anticipated event, often despite positive developments. This reaction suggests that the positive sentiment surrounding the ETF launch had already been priced in leading up to the event. A similar pattern was observed in January when Bitcoin (BTC) faced a similar decline following the introduction of its spot ETFs.
ETH/USD four-hour price chart. Source: TradingView
ETF Outflows and Market Pressure
Compounding Ether’s decline were significant outflows from spot ETFs, amounting to $113.3 million on their second trading day, primarily driven by withdrawals from Grayscale’s Ethereum Trust, which experienced a staggering $326.9 million in outflows. Despite this, other ETFs, such as the Fidelity Ethereum Fund and the Bitwise Ethereum ETF, reported net inflows, indicating a shift in investor strategy towards lower-fee alternatives.
Ethereum ETF net flows daily. Source: Farside Investors
Broader Market Influence
Ether’s price drop is also influenced by external market factors. The ongoing reimbursement process for approximately 127,000 creditors of the defunct Mt. Gox, combined with a significant sell-off in megacap technology shares, has heightened risk aversion among investors. The US stock market experienced its worst day since 2022, dragging down sentiment across asset classes, including cryptocurrencies.
Ethereum ETFs fee comparison. Source: Issuer Filings
Technical Outlook
From a technical perspective, Ether’s recent losses align with a correction within its prevailing descending channel pattern. If this trend continues, ETH could potentially decline toward a support level of around $2,850, a target that has historically provided strong long-term support.
