The price of Ether, the world’s second-largest cryptocurrency, has experienced a sharp decline of 26% since the launch of the first Ether-based exchange-traded funds (ETFs) in the United States. Despite the anticipation surrounding the historic launch, the debut of these ETFs has not provided the expected boost to Ether’s value.
As of the latest data, Ether is trading at $2,572, down over 24% in the past month. The decline comes in the wake of the U.S. Ether ETFs generating substantial selling pressure, with net outflows totaling $420.5 million since their launch. According to Farside Investors, this significant outflow has contributed to the downward trend in Ether’s price, contrary to the expectations of many investors.
Increased Ether Supply Adds to Downward Pressure
Adding to the challenges, the supply of Ether has grown significantly since the launch of the spot ETFs. Since the ETFs began trading on July 23, the supply of Ether has increased by 60,555 ETH, equivalent to over $155 million. This increase has put further pressure on the cryptocurrency’s price, with a supply growth rate of 0.61% over the past 30 days.
The current supply dynamics show a yearly issuance rate of 940,000 Ether, while the burn rate stands at 203,000. This imbalance in supply and demand is likely a key factor in the ongoing price decline.
Impact of the Dencun Upgrade and Future Outlook
The recent Dencun upgrade, Ethereum’s most significant update since the Merge, was expected to reduce transaction fees and improve the scalability of layer-2 networks. However, Ether’s price has struggled since the upgrade went live on March 13. According to CryptoQuant, the price of Ether has fallen by 35% since the Dencun upgrade, with an increase in supply by more than 197,000 ETH during this period.
Despite the current bearish trend, some analysts remain optimistic about Ether’s long-term prospects. A popular crypto trader, Ted, suggested in an August 11 post on X that Ether could be poised for a breakout in early 2025. Based on historical chart patterns, he predicts a consolidation breakout in November or December 2024, followed by a parabolic price run in the first quarter of 2025.
