Why Is Ether Down Today? Market Fears and Growing Supply Help Fuel 5% Slide

Why Is Ether Down Today? Market Fears and Growing Supply Help Fuel 5% Slide

Ethereum Faces Bearish Pressure but Analysts See Potential for a Price Rebound

Ether (ETH) has dropped over 5.1% in the past 24 hours, falling below $2,600, while Bitcoin (BTC) is also down around 2.9% to $95,700. This decline has contributed to a nearly 4% dip in the CoinDesk 20 Index, reflecting broader market concerns following U.S. President Donald Trump’s announcement of upcoming reciprocal tariffs, which have heightened fears of a trade war.

Several factors are weighing on Ethereum’s price, including its circulating supply surpassing pre-Merge levels. Initially, the Ethereum Merge—a shift to a Proof-of-Stake (PoS) consensus mechanism—was expected to reduce ETH’s supply. However, after the activation of the “Dencun” upgrade, which lowered transaction fees on layer-2 networks, the rate of ETH burned through transactions has decreased, leading to supply growth. Data from Ultrasound.money shows that ETH’s circulating supply has increased by 8,242 ETH since the Merge.

Additionally, the U.S. Securities and Exchange Commission (SEC) recently delayed its decision on approving options contracts for BlackRock’s iShares Ethereum Trust (ETHA), adding to uncertainty around ETH’s market performance. Competition from other networks, such as Solana, and regulatory scrutiny of the Ethereum Foundation have further pressured ETH, causing its value relative to BTC to drop to 2021 levels.

Despite the bearish outlook, analysts suggest a potential price rebound. Some see ETH mirroring a pattern observed before a past bullish rally. Jake Ostrovskis, an OTC trader at Wintermute, noted strong over-the-counter demand for ETH, while analysts at Santiment highlighted a decline in the number of ETH tokens at a profit, which could set up the cryptocurrency for a surprise bounce once market conditions stabilize.