What’s Ethereum’s deal?

Ethereum’s been taking a beating lately. Since the start of 2024, it’s dropped about 25% against Bitcoin, sinking to its lowest levels in over three years. The outlook isn’t looking too hot either. 

With the Federal Reserve potentially cutting interest rates in September, things could get worse. It’s a mess, honestly. The whole market is tense, and Ether seems to be on the wrong side of the bet.

Why is this happening? The ETH/BTC pair is becoming more tied to the US dollar Index (DXY), which isn’t good news. The DXY has dropped about 5.35% from its peak in 2024. As of late August, the 30-day average correlation between ETH/BTC and DXY was sitting at 0.78. 

For context, it was just 0.10 at the beginning of the year. This means traders are moving away from Ether, favoring Bitcoin as the dollar weakens. Ethereum-related investment products have not had it easy either. There were $36 million in outflows over the past week. 

Even though new Ethereum ETFs were seeing some inflows, Grayscale’s Ethereum Trust (ETHE) wasn’t helping—quite the opposite. It had a massive $118 million outflow. The new Ethereum ETFs that launched on July 23 pulled in around $3.1 billion in inflows. 

But guess what? Grayscale’s ETHE countered that with a whopping $2.5 billion in outflows. It’s like a push and pull, with not much net gain for Ethereum overall.

This back and forth with the inflows and outflows is adding to the uncertainty around Ether. People are nervous. And then there’s the Ethereum Foundation. These guys are always moving large amounts of Ether, and people pay attention when they do. 

Recently, they sent around 35,000 ETH, which is about $96 million, to a Kraken exchange wallet. Remember in 2020 when they sold 100,000 ETH? That was around $63 million back then, at a price of $635 each. 

Just five months later, ETH shot up to $4,182. And it didn’t stop there—it peaked at $4,891.70 in November of that same year.

So, are they playing the same game this time? Are they expecting another massive price surge? Arkham Intelligence, the blockchain tracing firm, certainly seems to think so.

At press time, Ether’s price is sitting at $2,578, a far cry from its glory days above $4,000.