Ethereum faces 7% decline to 130.2 BTC due to mining outage

A variety of events in the cryptocurrency market were blamed for a large drop in Ethereum’s value to 130.2 BTC, according to a statement dated October 4th. This downward trend was primarily caused by the sudden cessation of mining operations, with approximately 600 petahashes per second of miners going offline. This disruption was a result of a power utility-mandated maintenance outage that occurred on September 26th. The subsequent impact on Ethereum’s value was a cause for concern and prompted discussions within the crypto community.

According to a report titled “Time to ‘pull the brakes’ on Ethereum and rotate back to Bitcoin” by K33 Research, highlighted the prevailing sentiment among analysts. According to Vetle Lunde, a senior analyst at K33, “The gravitational pull in crypto for the time being stays in BTC.” This statement was reflective of the sentiment in the crypto market at the time. Anders Helseth and Vetle Lunde of K33 noted that the performance of nine new Ether futures exchange-traded funds (ETFs) had been relatively poor. They encouraged a return to Bitcoin, saying it was “time to pull the brakes on ETH and rotate back into BTC.”

The report emphasized that the initial trading volume of Ether futures ETFs accounted for only 0.2% of what the ProShares Bitcoin Strategy ETF (BITO) had accumulated on its first day of trading in October 2021. While this disparity was expected to some extent, given Bitcoin’s established dominance, the underwhelming numbers significantly fell short of expectations. The lack of institutional appetite for Ether ETFs led to a revision of earlier advice to increase ETH allocation, especially during the hype surrounding ETFs.

Analyst Vetle Lunde noted, “The ETH futures ETF launch provides an important lesson for evaluating the impact of easier access to crypto investments for traditional investors: increased institutional access will only create buying pressure if significant unsatiated demand exists. This is not the case for ETH at the moment.”

In the section of the report titled “More chop ahead,” Lunde explained that the crypto market seemed to lack meaningful short-term price catalysts and was likely to continue moving sideways in the near future. Lunde believed that this environment was more favorable for Bitcoin, which had the potential for ETF approval early the following year and a halving event scheduled for mid-April. He concluded, “The gravitational pull in crypto for the time being stays in BTC, with a promising event horizon down the line, still favoring aggressive accumulation.”

Ben Laidler, an eToro global markets strategist, expressed a similar view on the future of crypto assets, albeit in a slightly more pessimistic tone. Laidler pointed to current macrotrends, such as actions by the Federal Reserve and oil price fluctuations, as potential triggers for downward price movements in mainstream cryptocurrencies like Bitcoin. He noted that with oil prices rising, there could be a cooling effect on market sentiment despite the need for positive news as the rate hike cycle progressed.

The crypto market experienced a notable decline in Ethereum’s value to 130.2 BTC, primarily due to a temporary halt in mining operations. This decline prompted discussions about the comparative performance of Ethereum and Bitcoin, with some analysts suggesting a shift in focus back to Bitcoin. The market remained cautious, with factors like ETF launches and macroeconomic trends influencing sentiment and price movements in the cryptocurrency space.