Why has ETH dropped sharply recently? Can it still be bought?
1. "Flash Crash" and Whale Sell-off
After Federal Reserve Chairman Powell indicated or hinted at a possible interest rate cut at Jackson Hole, the market experienced a strong rebound. Ethereum reached a historical high this weekend. However, shortly after, a major player (whale) liquidated a large amount of Bitcoin, triggering panic in the market, causing a chain reaction downstream, including a "flash crash" correction for crypto assets like ETH, accompanied by massive stop-loss orders being triggered, leading to a sharp price drop.
For instance, it was reported that ETH and BTC alone triggered approximately $296 million and $273 million in contract liquidations, respectively.
2. ETF Sell-off and Profit-Taking Pressure
In recent days, there has been a significant outflow of funds from Ethereum ETFs, with institutional investors taking profits at high prices; for example, large withdrawals occurred between August 18-18 (ranging from $59M to $639M), alternating with some inflow situations, making prices highly sensitive to supply and demand changes.
3. Changes in Macroeconomic Conditions and Interest Rate Expectations
Recently, the U.S. PPI (Producer Price Index) was higher than expected, cooling market expectations for Federal Reserve interest rate cuts, leading to capital withdrawal from risk assets like cryptocurrencies. At the same time, some analyses indicate that a strong dollar and rising borrowing costs have weakened short-term support for assets like ETH.
4. Technical and Liquidity Factors
Despite the obvious short-term correction, analyses indicate that Ethereum still possesses sufficient liquidity and trading volume, and there has not been a real market bloodbath. Institutional confidence in its long-term prospects remains. For instance, Kaiko's analysis suggests that despite the price decline, market participation remains supportive.
Can it still be bought?
Long-term Investors
If you are optimistic about the ETH ecosystem and its long-term applications, consider building positions in batches, taking advantage of recent lows as a layout opportunity.
Short-term Investors
It is advisable to be cautiously observant, and it is recommended to wait for market stability and clear signals before considering entry.
