Ethereum extended its heavy sell-off on Thursday morning as investors responded to continued ETF outflows. $ETH fell to $2,059, its lowest level since August 19, and is approaching a death cross pattern, which may lead to further downside in the near term.
Ethereum price falls amid ETF outflows
The $ETH token deepened its decline as American investors kept pulling money from their ETFs. Spot Ethereum ETF outflows have reached $551 million so far this month. Flows have been negative on every day except November 4, when they added $53 million in assets.
This month's outflows follow a loss of $1.6 billion in assets in October. Most of the redemptions occurred at BlackRock's ETHA, followed by Fidelity's FETH and Invesco's QETH. In total, the funds currently hold more than $11.6 billion in assets.
The outflows coincide with the Crypto Fear and Greed Index dropping into the fear zone, at 26. The index has sold off sharply from its year-to-date high of 81, reached in September.
Historically, Ethereum and other coins have tended to underperform the broader market when the index is in the fear zone, and to outperform when it is in the greed zone.
Fear intensified after last week's midterm elections, in which Democrats won control of the Senate and the House of Representatives. Their win means the party will lead key committees, including the Senate Banking Committee, which will be chaired by Senator Elizabeth Warren, a crypto critic.
As a result, the party could focus on tightening crypto regulation, a sharp departure from the Republican agenda. For example, it is considered highly unlikely that the Senate will pass the CLARITY Act.
Ethereum has also slumped as US bond yields continued to rise. The ten-year yield climbed to 5.02%, while the five-year yield rose to 4.85%. Yields increased after the US released strong jobs and inflation data. The economy added over 165k jobs last month, while headline and core inflation both rose on a monthly basis.
Ethereum has also fallen as investors reassess a report published by Culper Research, the New York firm that in May warned about Jensen Huang's relationship with Alice Huang. The research firm was the first to flag concerns about Nvidia's Chinese business.
Earlier, the firm had also warned about Ethereum, pointing to Vitalik Buterin's selling while BitMine was buying. It also identified several issues, particularly with last year's Fusaka upgrade.
The analyst warned of address poisoning fraud on Ethereum, its low staking yield, fairly high inflation, and the impact of Fusaka on 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 the $ETH price in a steep sell-off over the past few months. It has dropped from a high of $2,800 in September to the current $2,057. A closer look shows the coin is about to form a death cross, which occurs when the 50-day and 200-day moving averages cross. It has also fallen below the Supertrend indicator.
The token may therefore keep falling in the near term. If that happens, the next key level to watch is $1,880. Conversely, a move above the key resistance at $2,200 would invalidate the bearish outlook.
