Here’s What Could Have Caused the Ethereum Price Crash

QCP Capital's latest report attributes the recent cryptocurrency downturn and Ethereum's drop to heavy selling of ETH.

The report, dated August 5, cites major players like Jump Trading and Paradigm VC as significant contributors to the market decline.

The panic selling that occurred during the Asian trading hours led to Bitcoin falling to $49,000 and Ethereum dropping to $2,100. QCP Capital also noted a 30% increase in front-end ETH trading volume during this period.

The report highlights that broader market sentiment worsened following disappointing US unemployment data, with the VIX index rising to 50—a level not seen since the COVID-19 panic and the 2008 financial crisis.

The USD/JPY 1M at-the-money volume also spiked to 16%, potentially increasing volatility. Additionally, global risk sentiment has been impacted by geopolitical events, including the recent killing of a Hamas leader by Israel.

Supporting these findings, 0xScope Protocol reported that market makers have deposited over 130,000 ETH into centralized exchanges. This influx occurred while Ethereum’s price dropped from $3,000 to $2,100.

Furthermore, CoinShares reported that Ethereum has experienced net outflows totaling $430 million since the launch of Ethereum ETFs, with recent outflows amounting to $146 million.

Despite initial optimism about the ETF launch, Ethereum has lost 27% of its value over the past week, falling from $3,300 to a low of $2,100 before rebounding slightly to $2,400.