Over the weekend, Ethereum, the second largest digital asset, took a hit as its price fell significantly, triggering broader negative sentiment around the crypto asset and the factors that could be responsible for the dip. Delving into the matter, popular crypto analyst and trader Michael Van De Poppe has offered insights on the recent price action of ETH, attributing it to Capitulation.
Ethereum Price Fall Due To Capitulation
The well-known market expert, Michael Van De Poppe, provided his insights on Ethereum with the crypto community on the X (formerly Twitter) platform. His perspective points to the substantial sell-off pressure and traders’ panic, which has played a part in ETH’s collapse.
According to Van De Poppe, since the listing of the spot Ethereum Exchange-Traded Funds (ETFs), ETH has been exhibiting notable weakness in the preceding weeks, falling to a new low for the first time in six months, thereby mirroring Bitcoin‘s movement.
Van De Poppe believes Grayscale’s Trust ETHE huge outflows following the launch of the spot ETH ETFs have greatly impacted the products negatively, causing weakness in ETH. On day one of trading, Poppe noted that Grayscale witnessed an outflow of over $400 million, but as of last Friday, that amount has fallen to about $60 million.
He further points to Jump Trading’s massive liquidation strategy, as the company was cited for offloading over $500 million worth of Ethereum under 2 days after spot ETH ETFs were listed, and they have continued doing so throughout the weekend.
Although Van De Poppe considers these factors to be the major reasons for ETH‘s recent weakness, he believes that the developments are happening due to the capitulation in the past two weeks, which has likely come to an end.
Van De Poppe classified the recent significant decline to capitulation since it is often used to describe such a severe correction in which double-digit losses occur over a brief period of time. In addition, the analyst stated that he would rather see such a significant correction because it suggests that the downtrend is almost over.
Economic Turmoil Fuels The Crypto Asset’s Dip
As Ethereum continues to drop, Van De Poppe has pointed out several negative developments around the world that may have accelerated the decline in the previous weeks. The first trigger underscored by the analyst is former US president Donald Trump losing in the battle for the Presidential seat with VP Kamala Harris, as Harris begins to earn more votes in the polls.
The second development highlighted by Van De Poppe is the ongoing war between Israel and Gaza, which has grown stronger because of the death of Hamas‘ leader in Iran.
Other triggers include the multiple stabbings taking place in the UK, the growing demand for rate cuts as a result of terrible economic data on the labor market released on Friday, and Japan experiencing its worst day on the stock market since 1987’s Black Monday.
Featured image from iStock, chart from Tradingview.com
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