Ethereum's price has taken a significant hit, falling nearly 10% in September. The cryptocurrency faces challenges from weak institutional interest and declining market liquidity. Analysts suggest that Ethereum's bearish trend may persist unless there is renewed retail interest and improved trading volumes.
On September 6, U.S. nonfarm payroll data reported 142,000 jobs, falling short of the 164,000 forecast. This disappointing data, combined with other market factors, has pushed Ethereum's price down by nearly 4% on September 7 and by 10% throughout the month.
Grayscale’s Ethereum Trust played a pivotal role in the sell-off during the first week of September, with $111 million in spot ETH ETF net outflows. Notable outflows included:
Meanwhile, positive inflows were minimal, with Fidelity seeing $4.9 million and Blackrock recording $4.7 million on September 3 and 7, respectively.
Due to the lack of institutional interest, WisdomTree withdrew its Ethereum Trust S-1 registration. Similarly, VanEck decided to discontinue its ETH futures ETF, citing factors such as performance, liquidity, and investor interest.
Retail interest in Ethereum has also waned. Over the past 30 days, Ethereum’s netflow across centralized exchanges showed a negative $856 million, indicating a lack of buying pressure.
In the futures market, traders have been doubling down on short positions:
This inverse trajectory between OI and Ethereum’s price suggests that aggressive shorting has contributed to the ongoing bearish trend.
One key reason Ethereum has struggled in the second half of 2024 is the decline in market liquidity. According to CCdata, the 5% market depth on Ethereum trading pairs has dropped significantly on centralized exchanges since its peak in June 2024.
The 5% market depth measures liquidity around the mid-market price and reflects the ability to buy or sell near market prices. Despite expectations that spot ETFs would improve this metric, the results have been disappointing, contributing to Ethereum's continued price struggles.
Without a resurgence of retail interest and trading volume, Ethereum may face continued bearish momentum. Market analysts remain cautious about Ethereum's outlook, emphasizing the need for increased demand to drive a potential recovery.
This article does not provide investment advice or recommendations. All investment and trading decisions carry risks, and readers should perform their own research before making any financial moves.
