Top Reasons Why Ethereum Price is Down Today?

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As a researcher with years of experience in the crypto market, I find myself closely watching the recent developments in Ethereum (ETH). The 6% drop in ETH price within the last 24 hours has certainly piqued my interest, and upon closer examination, several factors seem to be at play.

Over the past 24 hours, I’ve observed a significant decline in Ethereum’s value, with a drop of approximately 6%. This dip has taken the price down to as low as $3,120 during this period. The primary reasons behind this downturn are rooted in the Federal Reserve’s more aggressive monetary policy stance, often referred to as ‘hawkish’, which casts a bearish outlook not only on ETH but also across the broader crypto market.

Top Reasons Why The Ethereum Price Is Down

The cost of Ethereum has fallen to around $3,120 due to a combination of reasons. Among these are the Federal Reserve’s tough monetary policy stance, unfavorable movements in ETF investments, and a significant selling spree by large Ethereum holders (ETH whales).

Fed’s Hawkish Stance

It’s the Fed’s seemingly aggressive approach that seems to have caused a significant drop in Ethereum’s price today. Although the Federal Reserve declared a 25 basis point rate cut, Chairman Jerome Powell’s speech suggested that the US Central Bank is adopting a more cautious or hawkish stance at the moment.

Powell suggested that it’s probable the Federal Reserve might shift towards a strategy of reducing its holdings (quantitative tightening) starting from next year. Some predictions indicate fewer interest rate reductions could occur in the following year since the Fed has reduced rates by three instances so far this year.

As an analyst, I share the same perspective as Cleveland Fed President Beth Hammack regarding potential inflationary pressures. This viewpoint bolsters the argument for implementing tighter monetary policies, particularly if upcoming economic data indicates a robust performance.

Negative ETF Flows

Yesterday, the decline in Ethereum’s price can be attributed partly to the large-scale withdrawal of funds from Spot Ethereum Exchange Traded Funds (ETFs). According to SosoValue data, these ETFs experienced a substantial daily outflow amounting to $60.47 million.

The majority of recent withdrawals from the fund can be attributed to Grayscale’s Ethereum Trust (ETHE), totaling approximately $58.13. This marks the first withdrawal in the past nineteen days, suggesting a potential shift in investor attitudes.

When investors withdraw their funds from cryptocurrency-based Exchange Traded Funds (ETFs), it usually indicates a pessimistic view towards the crypto market, as this action results in increased selling pressure. This is because ETF providers must sell off the assets they manage to fulfill these redemptions.

ETH Whales Are Selling

Large Ethereum investors, often referred to as “whales,” are also unloading their Ether holdings, contributing to the current drop in Ethereum’s price today. CoinGape recently reported two such whales who sold 22,746 ETH worth approximately $7.7 million and another 49,910 ETH worth about $170 million within the last 24 hours.

It’s worth mentioning that the Ethereum Foundation has added to the market’s downward trend by selling 100 ETH on December 17, as observed by the on-chain analytics platform Lookonchain. Since this sale, the price of Ethereum has decreased approximately 17%.

Over the past year, the Ethereum Foundation has disposed of approximately 4,466 ETH, which amounts to roughly $12.6 million. This was done at or near the peak of each Ethereum market cycle.

A Positive For ETH

Even though Ethereum’s price fell today, it’s encouraging to note that other investors are still purchasing it, which bodes well for the overall price. As CoinGape recently reported, World Liberty Financial – led by Donald Trump – has acquired an additional 759 Ether today, bringing their total Ether holdings to a substantial 16,362 Ether (approximately 54.62 million dollars’ worth).

According to reports on Lookonchain, large investors, or “Whales,” have begun purchasing Ethereum (ETH) as the market recovers. Today, four new wallets withdrew a total of 8,440 ETH, equivalent to approximately $28.43 million, from Binance.

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2024-12-20 20:13