Ethereum (ETH) critical data: All eyes on altcoins!

ETH liquidity on US exchanges has fallen by as much as 40 percent since spot $ETH ETFs began trading.

Ether liquidity has fallen by 20 percent in US markets since the launch of nine ETFs in July. The drop in liquidity raises concerns and, more importantly, indicates greater sensitivity to large orders. With shallow market depth, it follows that even small transactions can cause large price changes.

Jacob Joseph, a research analyst at CCData, said liquidity is still better than at the beginning of the year, but has fallen by almost 45 percent since its peak in June. This is mainly due to weak market conditions and seasonal effects, as fewer transactions occur in the summer months.

Spot #ETH ETFs were expected to increase liquidity, as did Bitcoin ETFs launched earlier this year. However, this did not happen. Ether ETFs have seen cumulative outflows of over $500 million since their launch. This has contributed to an overall decrease in liquidity, making markets even more volatile.

The decrease in liquidity is actually a challenge for both investors and traders. In low liquidity situations, slippage (the opening of the price range for buying and selling) is much higher.

The big problem is that institutional investors want their markets to be stable and have good liquidity. If the number of transactions from these big players decreases, a vicious cycle of even lower liquidity and prices can begin. For now, #ETH is trading at around $2,258, down more than 4% in the last 24 hours.