Ethereum price fell 22% in August. Lack of institutional demand at current prices is a problem, says Lecker Capital's Quinn Thompson.
Lackluster ETF demand and growing tech criticism hit Ethereum in August, leading to the asset's biggest monthly drop in more than two years.
“A new buyer may not see the value at current prices,” said Quinn Thompson, founder of crypto hedge fund Lecker Capital. News.
And it could get worse. Thompson said investors may not be tempted to buy until the price is “a little bit down from here.”
He pointed to the recently launched Ethereum exchange-traded funds, which many expect will boost the second-largest crypto.
In their first 29 days of trading, Ethereum ETFs experienced $477 million currents.
On the other hand, Bitcoin ETFs have attracted attention $5.1 billion In the same period after their January debut.
Ethereum sentiment declines
It's not just a lack of institutional interest weighing on Ethereum.
“Sentiment around it is very poor,” Brian Ruddick, a researcher at crypto trading firm GSR, said in a statement. X post.
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Ruddick said the decline in network fees contributed to that pessimism.
More Ethereum functionality has moved to more efficient Layer 2 blockchains, such as the Coinbase base network. These Layer 2s process more transactions at a lower cost, which means fees on the main Ethereum network decline.
This situation has turned the once deflationary ether token into inflation again – a dirty word among crypto users who often scorn money printing rooted in the traditional economy.
The poor sentiment is also reflected in the Ethereum derivatives markets.
The Block Scholes Ethereum Senti-Meter, a tool that measures sentiment expressed by crypto derivatives markets, produced readings below 40 out of 100 for the entire month of August.
Readings below 50 indicate a bearish bias.
In August, the Ethereum price fell 22% to around $2,500.
The last time Ethereum experienced such a steep monthly decline was in June 2022, when it fell 45% amid a market-wide wipeout due to the collapse of the Terra blockchain a month earlier.
Competing with Bitcoin
There's also the issue of where Ethereum fits in with competing crypto assets.
In recent months, presidential candidate Donald Trump has positioned himself as a pro-crypto candidate, promising to create a “strategic” national bitcoin stockpile.
In response, Bitcoin traded in lock step with Trump's election prospects.
While some, including Lekker Capital's Thompson, questioned the Trump-Bitcoin connection, crypto market maker Wintermute said the top crypto asset was in demand as a “clear election proxy trade.”
With bitcoin the go-to crypto for those betting on Trump's election victory, Ethereum has been sidelined, Wintermute said in a note on Friday.
Rudick also noted how Ethereum struggles to define itself in other ways.
“It's stuck in the middle between Bitcoin as the best store of value and Solana as the best high-performance blockchain,” he said.
There is Tim Craig News' Edinburgh-based DeFi correspondent. Reach out with tips at [email protected].
Related TopicsEthereumEtherium ETFCrypto Trading
