We did not have good weeks for altcoins, and most of them fell to new annual lows. Some even went deeper. For example, ADA Coin is lingering at 2022 and 2023 levels and could fall to the last bear market’s low if sales continue. So, what is the reason for the endless decline in ETH and altcoins?
Why is Ether Falling?
ETH was said to potentially see bigger dips 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 of other altcoins. Aurelie Barthere, the head research analyst at the Nansen on-chain analytics platform, mentions that the significant weakening of investors’ risk appetite has caused prices to erode this much.
“BTC has dropped 14% since July 23. In my view, the decline in ETH price is not much related to the ETF launch. It is more about fatigue and relaxation in risk appetite.”
The Future of Cryptocurrencies
In the short and medium term, many negatives have undermined investors’ risk appetite. From non-buyers’ sales to days when US data negatively impacted the outlook. All of this meant the erosion of risk-taking investors over months. Investors who bought near the lows saw larger BTC sales before reaching reasonable profit levels.
Interest gradually weakened 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.”
