Ethereum Sentiment Drops: Will ETH Price Continue to Decline?

Coinspeaker
Ethereum Sentiment Shifts to Negative: Is a Drop in ETH Price Imminent?

Recently, investors have shown a decline in optimism regarding Ethereum

ETH
$2 535



24h volatility:
0.6%


Market cap:
$305.22 B



Vol. 24h:
$15.51 B

price outlooks, reflected in the negative sentiment within the market. Kaito data indicates that ETH sentiment has become pessimistic surpassing levels last seen in August.

Kaito data

It’s important to recognize that the decline in August was part of a larger market downturn. However, the current pessimism has been associated with ongoing fears regarding the altcoin’s underperformance relative to Solana

SOL
$172.8



24h volatility:
0.7%


Market cap:
$81.19 B



Vol. 24h:
$4.48 B

and Bitcoin

BTC
$67 750



24h volatility:
1.3%


Market cap:
$1.34 T



Vol. 24h:
$34.33 B

.

ETH’s Underperformance Compared to SOL and BTC

This phase of mild recovery has seen ETH drop further while SOL and BTC have seen gains, a pattern that has been evident since the beginning of 2024. Notably, the SOL/ETH ratio, which tracks the value of SOL relative to ETH, reached a new all-time high (ATH) of 0.070 this week, indicating SOL’s superiority over ETH.

Source: CoinMarketCap

Commenting on SOL’s success, Andrew Kang, co-founder of the crypto investment firm Mechanism Capital, suggested that this trend might persist and prompt further selling of ETH.

“Longing Solana while hedging with BTC or ETH has proven to be one of the best risk-adjusted strategies with significant size this year. With new participants opting for Solana and previous holders gradually liquidating their ETH, I don’t foresee a change in this trend,” Kang remarked.

Analyzing ETH Price Trends

Source: Hyblock

The recent decline in ETH’s price is noteworthy, especially as large investors (whales) have shown diminished interest in the altcoin, as indicated by the negative Whales vs. Retail Delta. This signifies that whales are not accumulating the asset compared to retail investors. A decrease in whale activity often precedes drops in prices.

Nonetheless, ETH may experience some relief if whale interest picks up. In mid-October, a surge in whale positions led to an ETH price increase above $2.7K. Therefore, unless whale demand rebounds, a continued pullback in ETH’s price could be expected in the near future.

Source: ETH/USDT, TradingView

Currently, ETH’s price has fallen below $2,500 as noted at the time of writing, representing a 10% drop from its recent peak of $2.76K. If the decline continues, crucial levels to monitor will be the support trendline and demand zone around $2.3K in the short term.

Additionally, a decline in demand from U.S. spot ETH ETFs could further hinder the altcoin’s price. At the start of the week, these products faced outflows totaling $20.8 million on Monday.

Between Tuesday and Thursday, they managed to accumulate over $15 million in inflows, resulting in a weekly net outflow of approximately $5 million, excluding the data from Friday. In summary, as of this report, demand has been net negative, which could impede a significant price recovery.

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Ethereum Sentiment Shifts to Negative: Is a Drop in ETH Price Imminent?