Ether’s value has fallen below the $3,000 threshold, marking a 5% decline within 24 hours. This drop is part of a broader downturn in the cryptocurrency market, which is reacting sharply to a lacklustre U.S. employment report.
Impact of U.S. economic data on Crypto market
Recent data indicating a rise in the U.S. unemployment rate from 4.1% to 4.3% last month has heightened fears of a looming recession, exerting downward pressure on various asset classes, including cryptocurrencies. This development has contributed to a 4% reduction in the overall cryptocurrency market capitalisation, now at approximately $2.2 trillion.
The rising jobless rate suggests potential economic cooling, causing investors to withdraw from riskier investments like cryptocurrencies. Despite the Securities and Exchange Commission’s approval of Ether-linked exchange-traded funds (ETFs), Ethereum’s price has not fared well, plummeting nearly 10% over the past 30 days. Initially, the price had surged to around $3,500, spurred by enthusiasm over the new ETF offerings.
However, significant outflows from these ETFs have intensified selling pressures. On August 2 alone, Ether ETFs experienced a net outflow of $54.27 million, culminating in a total outflow of $510.7 million, indicating a broad market sell-off. Grayscale’s ETHE fund reported a substantial outflow of $61.43 million, whereas Fidelity’s FETH and Franklin’s EZET saw inflows of $6.02 million and $1.14 million, respectively.
Broader market trends and investor sentiment
Last week, Ether’s price decreased by 9%, with cryptocurrency trading at an average of $2,990. Despite this year’s earlier gains of 31%, recent market activities have not been favourable. Data from Coinglass reveals that Ethereum faced over $80 million in liquidations of long and short positions in the last day alone, with long positions comprising $71.60 million. This suggests that many traders anticipated a price increase, which did not materialise, leading to widespread losses.
Source: Coinglass
Other prominent altcoins have similarly suffered, with the cryptocurrency Fear and Greed Index dropping below 50 points, indicating a shift to a Neutral sentiment. Solana and BNB, for instance, have seen decreases of 6% and 8%, respectively, over the same period, with Solana experiencing an 18% drop in the past week. The meme coin sector has not been spared either, with Dogecoin and Shiba Inu witnessing a 16% and 14% decline, respectively. Lesser-known coins such as PEPE and WIF have also faced significant losses of 22% and 35%, highlighting the pervasive bearish sentiment across the crypto landscape.