Ethereum, the second-largest crypto by market cap, dropped below $4,000 early Thursday for the first time since August 7, down over 4% in the past 24 hours and 19% from just over a month ago, when it hit an all-time high of $4,946.

Ethereum ETFs are also suffering, with $296 million in outflows since Monday, according to SoSoValue data.

Michael McCluskey, CEO of Sologenic, told Sherwood News that ethereum’s volatility isn’t a reflection of its fundamentals; rather, it’s the byproduct of new economic forces, namely large-scale institutional players entering in ways the network has never experienced.

“Although this shift brings short-term turbulence, it also signals ethereum’s progression into mainstream finance. Mix this with a recent historic market rally, key US inflation data, and fresh signals from the Federal Reserve, and you have investors who are jittery,” he said, adding that as tokenization of real-world assets gains traction on ethereum, institutional participation should stabilize markets and reinforce ETH’s role as a core digital asset.

Kevin Rusher, founder of real-world asset protocol RAAC, said there was another factor: mounting concerns over digital asset treasuries buying crypto near the top of the market, which is weighing on overall sentiment. 

“Add to this the competition from other chains, and it makes sense that ETH has given up some of its gains,” he said. 

Despite the volatility, ethereum advocates are marching on with their plans. Rex-Osprey, fresh off the launches of its XRP and dogecoin ETFs, launched its ETH + Staking ETF, the first US ETF to give investors exposure to ethereum with staking rewards.

“Making the returns of ETH plus staking available to investors in their securities accounts is a big step forward for both ETH and the ETF industry,” Rex Shares CEO Greg King told Sherwood.

The SEC also just approved the expansion of the Hashdex Nasdaq Crypto Index US, which offers exposure to ethereum, bitcoin, XRP, solana, and stellar.

Greg Benhaim, executive vice president of product at digital asset manager 3iQ, said that while the SEC’s new generic listing standards rule seems bullish for the industry, it may be challenging for issuers to fight to raise capital when new products are being listed every single day.

“The average investor may have a tough time distinguishing between which coins to purchase,” Benhaim said. “Over the long term, this will pave the way for the industry to identify which assets have significant retail appeal in ETF format and which don’t.”