Ethereum's Price Drops 46% as Institutional Outflows Surge

Ethereum's price has been struggling to stay above the $1,600 mark as institutional interest wanes and selling pressure mounts. The cryptocurrency has been on a downward trajectory since December, marking its longest multi-month decline since its launch in 2017. As of Thursday, ETH was trading at approximately $1,580, representing a 46% drop over the past 12 months. This extended bearish trend has raised concerns among investors about when the downtrend might reverse.

US spot Ethereum ETFs have recorded significant outflows, losing $12.01 million on Wednesday alone. Since the implementation of tariffs, these funds have experienced a staggering $909 million in net outflows. The persistent exodus of institutional money has caused the total net assets of ETH ETFs to plummet by more than 60%, falling from an all-time high of $14.28 billion in December to just $5.25 billion on Wednesday.

Despite the bearish market sentiment, Tron founder Justin Sun announced on Thursday that his organization has no plans to sell its Ethereum holdings. Sun, who reportedly holds around 665,000 ETH valued at just under $1 billion at current prices, also revealed plans to strengthen ties with the Ethereum community. "Tron will continue to seek opportunities to collaborate with more Ethereum developers and build our industry together," he added. This show of confidence comes at a crucial time for Ethereum, as the value of Sun’s ETH holdings has reportedly decreased from previous highs of approximately $2.5 billion due to the market downturn.

While Sun maintains his bullish stance, not all large holders share his outlook. Digital asset firm Galaxy Digital has deposited 49,681 ETH worth about $79.37 million to exchanges over the past five days, raising speculation about potential selling pressure from institutional investors.

Ethereum’s upcoming Pectra upgrade, scheduled for May 7, 2025, could potentially revive network activity and investor interest. The first phase of this upgrade will establish a new layer-2 blob capacity, which aims to increase transaction efficiency while accepting payments in stablecoins like USDC and DAI. Pectra will also raise the maximum staking limit from 32 ETH to 2,048 ETH, potentially attracting more institutional participation in the network. The second phase, planned for late 2025 or early 2026, will implement a new data structure to enhance Ethereum’s scalability.

These improvements come as Ethereum transaction fees have reached their lowest point since 2020, with users paying just $0.168 per transaction. While low fees benefit users, they also reflect reduced blockchain utilization and decreased network activity. The drop in fees stems from a general decrease in blockchain usage, with retail investors largely stepping away from the ecosystem amid global economic uncertainty and market unpredictability. Proponents of Ethereum hope that the Pectra upgrade will make the network more efficient and create conditions for both existing and new users to participate, potentially triggering a revival in activity and price.

ETH ETF issuers are seeking approval from the Securities and Exchange Commission to allow staking within their ETH ETF products. If approved, this would enable investors to earn approximately 3% yield on their ETH ETF holdings, which could help slow down selling pressure. Despite current market challenges, Ethereum’s long-term outlook remains tied to its fundamental role in DeFi and blockchain-based applications, as well as continued development of the platform. Investors and users alike are watching closely as Ethereum navigates this challenging period, with many hoping that technical upgrades and sustained development will eventually lead to a price recovery.