Ethereum ($ETH) Price Dropped Over 6.7% In a Day. Why is it Down?

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As a researcher with extensive experience in the cryptocurrency market, I find the current price decline of Ethereum (ETH) disheartening, especially given the highly-anticipated launch of spot Bitcoin and Ether exchange-traded funds (ETFs) in Hong Kong. The modest trading volumes recorded during the launch are significant when compared to the successful launch of spot Bitcoin ETFs in the United States.

Over the past 24 hours, the second largest cryptocurrency in terms of market value, Ethereum ($ETH), experienced a decline of over 6.7%. This downward trend comes as part of a broader cryptocurrency market slump causing the total market capitalization to dip approximately $100 billion.

As a researcher studying the cryptocurrency market, I’ve observed that the price decline caused Ethereum (ETH) to drop beneath the $3,000 threshold shortly following the launch of spot Bitcoin and Ether exchange-traded funds (ETFs) in Hong Kong. Despite the considerable anticipation surrounding this event, the trading volumes reached only around $12.4 million – significantly lower than the predicted $100 million.

In the opinion of Eric Balchunas, an ETF analyst at Bloomberg, this number holds importance when considered within its specific context. Nevertheless, it’s important to note that the success of spot Bitcoin ETFs being introduced in the US stands in stark contrast to this figure.

We made an effort to caution everyone about keeping a realistic outlook regarding Hong Kong, particularly with regard to the overly optimistic $25 billion estimate for HKEX’s Hong Kong-Shanghai connect scheme. However, it is important to note that if we focus on specific figures, this was indeed a significant event: for instance, ChinaAMC’s Bitcoin ETF raised an impressive $123 million during its first day, making it the sixth largest ETF launched in Hong Kong over the past three years and ranking in the top 20% overall.

— Eric Balchunas (@EricBalchunas) April 30, 2024

The prices of cryptocurrencies are declining concurrently with a significant drop in consumer confidence, which has reached its lowest point since July 2022. The Conference Board’s consumer index came in at 97, significantly below the anticipated reading of 104 and a decrease from the previous month’s level of 103.1.

The situation is becoming more complex as there are increasing worries over the Federal Reserve’s monetary policy position. The Federal Open Market Committee (FOMC) is set to convene on May 1st, and market participants are preparing for the possibility that the Fed will stick to its aggressive stance to tackle inflation.

As an analyst looking at the data from the Commodity Futures Trading Commission (CME), I’ve noticed that anticipation for further interest rate cuts this year has been delayed. Based on current forecasts, it appears that no more than two reductions are predicted by the end of the year. Historically, the cryptocurrency market experiences heightened volatility in the run-up to Federal Open Market Committee (FOMC) meetings. Consequently, investors tend to exercise greater caution during this period.

According to my analysis, Standard Chartered continues to hold a positive view towards the cryptocurrency market despite anticipating a setback in the approval process for U.S.-listed spot Ether exchange-traded funds (ETFs). The bank had initially projected that U.S. regulatory approval for such ETFs would be granted by May, but I now believe that this timeline may be pushed back.

As a crypto investor, I’ve noticed that prediction markets like Polymarket currently give a 12% probability for a Bitcoin futures ETF approval by the end of next month, despite the SEC’s green light on spot Bitcoin ETFs back in January this year.

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2024-04-30 19:35