- Ethereum’s price dropped over 6% to $3,120 due to the Federal Reserve’s hawkish stance, negative Spot ETH ETF flows, and significant sell-offs by whales, including the Ethereum Foundation.
- Despite the downturn, some whales are accumulating ETH, hinting at potential market recovery.
The Ethereum (ETH) market faced a sharp downturn, with prices dropping over 6% in the last 24 hours to a low of $3,120. The slump is attributed to a combination of macroeconomic trends and internal market dynamics. Below, we explore the key factors contributing to this decline.
1. The Fed’s Hawkish Stance
The Federal Reserve’s increasingly hawkish tone has emerged as a central driver of Ethereum’s price drop. Although the Fed announced a modest 25 basis points rate cut, Chair Jerome Powell signaled a potential shift toward quantitative tightening starting next year.
Powell’s hints at fewer rate cuts in 2024, combined with inflation concerns raised by Cleveland Fed President Beth Hammack, have cast a shadow over the broader financial markets. The crypto market, heavily influenced by macroeconomic policies, has responded bearishly to these developments, dragging Ethereum prices lower.
2. Negative Spot ETH ETF Flows
Spot Ethereum ETFs recorded a negative daily inflow of $60.47 million, with Grayscale’s Ethereum Trust (ETHE) responsible for $58.13 million of the outflows. This marks the first negative inflow in 19 days, reflecting shifting investor sentiment.
These outflows create additional selling pressure, as ETF issuers must offload assets under management to meet redemptions. The result is a bearish trend, not only for Ethereum but for the broader crypto ecosystem.
3. Whale Sell-Offs Intensify Pressure
Large-scale ETH holders, or whales, have been offloading their assets, contributing significantly to the price drop. In the past 24 hours, notable transactions include a whale selling 22,746 ETH (approximately $7.7 million) and another offloading 49,910 ETH (about $170 million).
Adding to the pressure, the Ethereum Foundation has also been selling ETH. On-chain intelligence revealed that since December 17, when the Foundation sold 100 ETH, Ethereum’s price has fallen by approximately 17%.
A Silver Lining for ETH
Amid the downturn, some whales are taking an opportunistic approach, accumulating ETH as the market shows signs of potential recovery. Donald Trump’s World Liberty Financial, for instance, added 759 ETH to its holdings, bringing its total to 16,362 ETH ($54.62 million). Additionally, fresh wallets have withdrawn 8,440 ETH ($28.43 million) from Binance, signaling confidence among some investors.
Final Thoughts
While Ethereum’s recent price action highlights short-term challenges, the long-term outlook remains uncertain but hopeful. As whales accumulate and markets adjust to macroeconomic shifts, ETH might find a stable footing. For now, traders and investors must stay vigilant, navigating through a landscape shaped by global financial trends and internal market dynamics.
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