Following the launch of the Ethereum ETF, the average market depth of 5% for ETH pairs on US-based centralized exchanges has dropped by 20%, now sitting at around $14 million.

Ahead of the launch of Ethereum spot ETFs in July, there was hope that these exchange-traded funds would bring additional liquidity to the asset. However, things have not worked out as expected, with Ethereum ETF inflows being virtually non-existent or even negative over the past few weeks.

While increased liquidity played a key role in the launch of the bitcoin spot ETFs in January, the story is different with Ethereum ETFs. In fact, since the Ether ETF launched on July 23, Ethereum order book liquidity has declined, according to data tracked by London-based CCData. All U.S.-based Ethereum spot ETFs have seen $500 million in net outflows since their launch.

Data shows that after the ETF’s launch, the average 5% market depth for ETH pairs on centralized exchanges in the U.S. dropped by 20%, now around $14 million. Similarly, on centralized offshore platforms, market depth dropped by 19% to around $10 million. This drop suggests that it is now easier to move the spot price of Ether by 5% in either direction, which could lead to a drop in liquidity and greater volatility in large trades. Speaking to CoinDesk, Jacob Joseph, research analyst at CCData, said:

“While market liquidity for ETH pairs on centralized exchanges remains higher than at the beginning of the year, liquidity has dropped by nearly 45% since its peak in June. This could be due to poor market conditions and the summer effect, which is often accompanied by lower trading activity.”

Low depth for an asset typically indicates low liquidity and high slippage while high depth indicates strong liquidity and low slippage.

ETH Price Faces Selling Pressure

Amid weak support from the Ether ETF, Ethereum (ETH) price continues to face selling pressure, sliding below $2,400 earlier today.

This Friday, 125,000 ETH options contracts will expire with a put-call ratio of 0.63, a maximum pain point of $2,500, and a notional value of $290 million.

The overall weakness of the crypto market this week is reflected in options data, with the maximum pain point matching the recent price decline, pointing to a delay in corrections.