- Ethereum ETFs face massive selling pressure amid expectations of a US recession following a weak jobs report from the BLS.
Ethereum (ETH) price hovers around $4,300 as of Sunday morning (UTC). Its current move is a continuation of a downtrend following a massive selling pressure stemming from its all-time high of $4,953.73 almost two weeks ago.
The $952.2 million in net outflows coming from spot Ethereum exchange-traded funds (ETFs) in the US added weight to the pressure in the last five trading days, starting on August 29 and ending on September 5.
BlackRock’s iShares Ethereum Trust ETF (ETHA) contributed $461.3 million, or 48.45%, to the total net outflows. Meanwhile, Fidelity Investments’ Fidelity Ethereum Fund (FETH) was the second-highest contributor to the trend, comprising 42.5% of the float with $404.7 million in net outflows.
Fears of US Recession Trigger Panic Selling
A significant spike in the spot Ethereum ETF outflows occurred last Friday at $446.8 million. Analysts pinned the cause to a series of bad news in the Bureau of Labor Statistics’ (BLS) jobs report in the US covering August.
According to the BLS, unemployment notably rose to 4.3% last month, exhibiting the highest numbers since 2021. This came with only 22,000 added jobs for the month, falling short of market expectations. Additionally, downward revision in the June jobs report indicated that the US had lost jobs for the first time since 2020 at around 13,000.
Surprisingly, most job losses happened in sectors that US President Donald Trump wanted to boost with his aggressive tariffs. The oil, gas, and coal mining, quarrying, and extraction industries reflected 6,000 job losses during the period. The manufacturing sector also shed 12,000 jobs in August, marking a 78,000 decline in the past year.
The blowback has made analysts sound the alarm again about an impending US recession. The cautious sentiment surrounding the possibility of an economic downturn could lead to most investors selling off their stocks amid expectations of a decline in corporate returns.
Investments that usually take the brunt of the trend include cyclical stocks that are sensitive to economic cycles, including those related to non-essential goods, tech, manufacturing, and construction. As of Friday’s market close, the S&P 500 fell 0.3%, the Dow Jones slid 0.5%, and the Nasdaq Composite slipped below the flatline.
Cryptocurrencies, including Bitcoin (BTC) and Ethereum, and crypto-related ETFs have a high chance of taking a massive hit as a knee-jerk reaction from investors due to their growing correlation with risk assets. However, their speculative narrative as “safe haven” or “digital gold” status in the event of a prolonged bear session in the equities market could eventually turn the tide.
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