Ethereum price continued its strong sell-off on Thursday morning as investors reacted to the ongoing ETF outflows. ETH dropped to $2,059, its lowest level since August 19 and is about to form a death cross pattern, which may lead to further downside in the near term.
Ethereum price falls amid ETF outflows
ETH token extended its sell-off as American investors continued selling their ETFs. Spot Ethereum ETF outflows have hit $551 million so far this month. They have had outflows in all days except for November 4 when they added $53 million in assets.
This month’s outflows is happening after they lost $1.6 billion in assets in October. Most of these outflows happened in BlackRock’s ETHA, followed by Fidelity’s FETH, and Invesco’s QETH. In total, the funds currently hold over $11.6 billion in assets.
The ongoing outflows is happening at a time when the Crypto Fear and Greed Index has dropped to the fear zone of 26. It has been in a strong sell-off from the year-to-date high of 81, which it reached in September.
Historically, Ethereum and other coins underperform the market whenever the asset moves in the fear zone, and vice versa.
The fear rose after last week’s midterm elections in which Democrats won the Senate and the House of Representatives. By winning, it means that the party will lead some key committees, including the Senate Banking Committee, which will be led by Senator Elizabeth Warren, a crypto critic.
As a result, there is a possibility that the party will focus on tightening regulations in the crypto space. That is a big divergence from what the Republicans focused on. For example, it is highly unlikely that the senate will pass the CLARITY Act.
Ethereum price has also slumped as the US bond yields continue rising. The ten-year yield jumped to 5.02%, while the five-year yield rose to 4.85%. Yields rose after the US published strong jobs and inflation numbers. The economy created over 165k jobs last month, while the headline and core inflation rose on a monthly basis.
Ethereum is also falling as investors re-assess a report published by Culper Research, the New York firm that warned about Jensen Huang’s relationship with Alice Huang in May. The research firm was the first one to warn about Nvidia’s Chinese business.
Notably, before that, it warned about Ethereum, pointing to the fact that Vitalik Buterin was selling, while BitMine was buying. It also identified several issues, especially with last year’s Fusaka upgrade.
The analyst warned about address poisoning fraud in Ethereum, its low staking yield, fairly high inflation, and the fact that Fusaka impacted its tokenomics. The report said:
“Post-Fusaka, total transaction fees – and thus base fee burn – have collapsed. As blocks have been filled with negligible-value spam, legitimate transactions no longer need to competitively tip validators for block inclusion. Lower priority fees impair validator economics and reduce staking yields, which leads to lower staking demand.”
ETH price technical analysis
Ethereum price chart | Source: TradingView
The daily chart shows that the ETH price has been in a strong sell-off in the past few months. It has slipped from a high of $2,800 in September to the current $2,057. A closer look shows that the coin is about to form a death cross pattern, which happens when the 50-day and 200-day moving averages cross each other. It has also fallen below the Supertrend indicator.
Therefore, the token may continue falling in the near term. If this happens, the next key level to watch will be at $1,880. On the other hand, a move above the key resistance at $2,200 will invalidate the bearish outlook.
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