Ethereum hit by multiple headwinds…lowest level in 2 months

Bloomingbit Newsroom

Summary

Reported that Ethereum's price fell to its lowest level in about two months.
Stated that weakening expectations for a US rate cut and concerns about a government shutdown led to weakened investor sentiment, resulting in institutional selling and outflows from spot ETFs.
Reported that optimism remains, with Standard Chartered Bank recently raising its price target for Ethereum.

Crypto Now

Weakening expectations for a US rate cut

Rising concerns over a government shutdown also had a negative impact

Ethereum's price fell to its lowest level in about two months. Analysts say that weakening expectations for a US rate cut, combined with concerns about a US government shutdown (temporary work stoppage), dampened investor sentiment. As institutional investors continued selling, funds are also flowing out of spot exchange-traded funds (ETFs) that invest in Ethereum.

According to Binance on the 28th, Ethereum's price fell as low as 3815 dollars on the 25th. About a month after it surpassed the 4000 dollars level on the 9th of last month, it slid back into the 3000 dollars range. The sharp price drop led to the liquidation of more than 400 million dollars' worth of long positions in the derivatives market.

A stronger-than-expected US economic growth rate acted as a negative factor. The US Commerce Department announced on the 25th that second-quarter GDP (final) increased by 3.8% from the previous quarter. It is the highest quarterly level in about two years. The first-quarter growth rate was -0.6%. This has reinforced views in financial markets that the US central bank (Fed) will not cut its policy rate for the time being.

Amplified concerns that a US government shutdown could occur were also cited as a factor weighing on Ethereum's price. On the 19th, a temporary budget bill put forward to avert a US government shutdown failed to pass the Senate. If the bill does not pass by the 30th, the US government will enter a shutdown.

Institutional selling also intensified. Digital asset manager Grayscale sold 53.8 million dollars worth of Ethereum in just the past week. As a result, large amounts of capital flowed out of spot Ethereum ETFs. On the 25th, 251.2 million dollars was net withdrawn from US spot Ethereum ETFs.

Despite the recent sell-off, financial markets remain optimistic about Ethereum's value. Last month, Standard Chartered (SC) bank raised its Ethereum price target from 4000 dollars to 7500 dollars.

Hwang Duhyeon BloomingBit reporter cow5361@bloomingbit.io

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