Ethereum’s price is dropping today due to significant selling from influential wallets and a lack of enthusiasm for the recent ETH futures ETF, which is impacting investor confidence.
Ether, Ethereum’s native token, has seen an 8.2% decrease between Oct. 2 and Oct. 9. Several factors contribute to this decline, including the regular issuance of new coins as per Ethereum’s monetary policy, notable sales by Vitalik Buterin, and a disappointing start for the futures-based exchange-traded fund (ETF).
In 2022, Ethereum underwent substantial upgrades, altering its coin issuance mechanism and introducing a burn mechanism to decrease the supply of ETH. This change, known as “ultrasound money,” led to a net decrease in ETH supply. However, the unpredictable nature of this monetary policy became apparent in September 2023, when coin issuance reversed due to decreased network activity.
Despite Ethereum’s mechanisms working as designed, reduced demand in transactions and high fees from network congestion pose challenges, only partially addressed by layer-2 scaling solutions.
Vitalik Buterin’s wallet has seen significant ETH movements, with 3,999 ETH sent to exchanges in the past five weeks. While speculation arises about the reasons behind this sale, the Ethereum Foundation’s recent sale of 1,700 ETH aligns with regular operational requirements.
A wallet linked to the FTX exploiter moved a substantial portion of ETH to THORChain and converted it into tBTC. While reasons for this conversion remain unclear, it suggests an anticipation of higher returns in fiat currency.
Despite the recent increase in ETH supply, its price trend against Bitcoin has been unfavorable since November 2022, underperforming by 25.7%. Negative sentiment surrounds Ether’s price due to increased regulatory risks, the resumption of net coin issuance, sales by influential figures, and weaker-than-expected demand for the futures-based ETF.
Understanding these factors provides insight into Ethereum’s recent poor performance, offering a comprehensive view of the current market dynamics.