Ethereum price drops by almost 6% after Federal Reserve keeps rates unchanged amidst outflows from ETH ETFs

Ethereum faced a 6% decline on Thursday as a result of significant exchange deposits made by Elwood Technologies and net outflows from Ethereum ETFs. The Federal Reserve’s decision to maintain rates at 5.25%-5.50% triggered a downturn in the crypto market, impacting Ethereum’s value. This led to negative flows in Ethereum ETFs, with a total of $77.3 million in outflows recorded on July 31, with the new Eight ETF unable to offset the $133 million outflows from Grayscale Ethereum Trust (ETHE).

Despite the negative impact on Ethereum’s price, Katalin Tischhauser, Head of Investment Research at Sygnum Bank, expressed optimism about the potential of ETH ETFs. Tischhauser suggested that these ETFs could attract between $5 billion to $10 billion, potentially driving Ethereum’s value upwards. She highlighted the possibility of ETH reaching $6,000 if inflows become positive and accelerate, similar to the effect seen with Bitcoin ETFs.

Meanwhile, Elwood Technologies’ wallets transferred 19,500 ETH, valued at $63.66 million, to Binance over the past two days. Interestingly, these transfers coincided with a drop in Ethereum’s price for the second consecutive time, indicating a potential correlation between the wallet movements and market fluctuations.

In terms of technical analysis, Ethereum was trading at around $3,110 on Thursday, marking a 6% decrease. The price drop triggered liquidations totaling over $77.96 million, with long liquidations dominating at 94%. The ETH Long/Short Ratio declined to 0.92, signaling a bearish sentiment among traders. The support level between $2,852 to $2,803 is crucial, as it has historically prevented further price declines for Ethereum.

Looking ahead, many traders remain optimistic about Ethereum’s long-term prospects, especially as Grayscale outflows diminish. This sentiment suggests that Ethereum could potentially surge by over 30% in the coming weeks, aiming to test the $4,093 resistance level. However, a break below $2,800 would invalidate this bullish outlook.

In conclusion, Ethereum’s recent market movements, influenced by exchange deposits, ETF outflows, and technical analysis, indicate a volatile yet potentially promising period for the popular cryptocurrency.