We did not have good weeks for altcoins, and most have retreated to new yearly lows. Some have even fallen deeper. For example, ADA Coin is lingering at 2022 and 2023 levels, and if sales continue, it could retreat to the low levels of the last bear market. So, what is the reason for the endless decline in ETH and altcoins?
Why is Ether Falling?
ETH was said to potentially see deeper lows due to outflows from the ETF channel. Since ETFs began trading on July 23, ETH ETFs have seen outflows of $420.5 million, mostly from the Grayscale fund. However, Nansen analysts mention another reason for the decline in the spot price.
This also explains the negative performance in other altcoins. Nansen’s head research analyst, Aurelie Barthere, mentions that the significant weakening of risk appetite among investors has caused prices to erode so much.
“BTC has fallen 14% since July 23. In my view, the drop in ETH price is not much related to the ETF launch. It’s more about fatigue and relaxation in risk appetite.”
The Future of Cryptocurrencies
In the short and medium term, there have been many negatives that have undermined investors’ risk appetite. From non-buyers’ sales to days when US data negatively impacted the outlook. All this meant the erosion of risk-taking investors over months. Investors who bought at levels close to the lows saw larger BTC sales before reaching reasonable profit levels.
Interest weakened gradually during rises, and panic sales accelerated in the opposite direction. This caused ETH and altcoin prices to constantly move backward, taking two steps back and one step forward. However, historical data tells us that such psychologically challenging periods are normal.
Nansen’s Barthere also says that the sales are not unique to crypto;
“We know that the first wave of sales in March led to losses, especially among investors interested in many crypto narratives. Then, a second sale occurred in July-August, in correlation with stocks. This happened in an environment where growth in the US is still strong but slowing, and valuations in traditional risk assets like US stocks are stretched. In my view, it is still uncertain whether we are just experiencing a consolidation pause or if crypto prices have peaked. If the Fed can lower rates while growth continues, the bull market in crypto and stocks will likely continue. If there is a sharper slowdown in growth, there will be less upside for risk assets.”
