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Ethereum drops nearly 6% amid outflows from US-linked funds
AI Summary
- Ethereum dropped nearly 6% due to investor withdrawals from US-based cryptocurrency funds
- Outflows from US spot Ethereum ETFs reached $197 million, coinciding with record-high ETH unstaking requests of $3.9 billion
- Analysts predict that Ethereum funds could soon hold a larger share of total supply than Bitcoin funds if inflows continue at the current pace
Ethereum fell sharply on Tuesday alongside a broad sell-off in digital assets, driven by investor withdrawals from several US-based cryptocurrency funds.
US spot Ethereum ETFs recorded outflows worth $197 million on Monday, the second-largest daily redemption on record. The sell-off coincided with record-high ETH unstaking requests, with pending withdrawals reaching $3.9 billion. Timothy Messer, head of research at BRN, said both factors “are weighing on market sentiment in the near term.”
He added in a note to investors that the $4,400 level now represents a critical support for the world’s second-largest cryptocurrency. According to CoinGecko, Ethereum is currently trading at $4,203.84, little changed from the previous day.
The outflows follow Ethereum’s failure to reach a new all-time high above its November 2021 peak of $4,891.70, after gains stalled at $4,776.32 on Thursday, August 14.
Analysts say the moves reflect profit-taking after Ethereum rose 66% over the past year, attracting broad institutional interest. Data shows that Ethereum funds hold about 5.08% of total supply, and Messer expects this share could soon exceed the 6.38% held by Bitcoin funds “if inflows continue at the current pace.”
Bitcoin funds also faced pressure, with Monday outflows totaling $122 million. While Bitcoin retreated from last Thursday’s record $124,457.12, Messer noted that “whales” continue accumulating, adding 20,061 BTC to wallets holding 10,000 coins or more over the past six days.
The declines came amid high-profile political developments, as President Donald Trump hosted European leaders at the White House to discuss the Ukraine war following an inconclusive summit with Russian President Vladimir Putin. Messer wrote that “crypto markets remain sensitive to such signals,” adding that the prospect of further talks could boost risk appetite.
He pointed to structural support for Bitcoin at $115,000, saying a breakout above $121,000 could pave the way for a retest of the $123,000–127,000 zone.
He concluded: “Geopolitical developments around US-Ukraine-Russia talks add two-way risks: a ceasefire could push Bitcoin above $120,000, while escalation would warrant caution. A defensive stance and selective buying remain the most prudent strategy.”
Ethereum
On the trading front, Ethereum declined by 5.7% to $4,124 on CoinMarketCap as of 20:13 GMT.
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