Back in July, when spot Ethereum ETFs received their final approval from the US Securities and Exchange Commission (SEC), the occasion was described as a “landmark event”; however, what followed was a significant drop in prices, suggesting that this asset may have fallen out of favor.

The second-largest cryptocurrency, which was trading at around US$3,478 on July 23, the day of the US SEC approval, is currently hovering around US$2,515.

It’s down 6 percent in just the last five days and over 26 percent since receiving a vote of confidence from the SEC.

The trend marks a significant departure from bitcoin's experience earlier this year, which saw its price jump more than 30 percent between January and March after spot bitcoin ETF trading was approved.

BlackRock's Bitcoin offering alone has seen about US$16.6 billion in inflows, while Fidelity's product has seen about US$8.9 billion.

Speaking to InvestorDaily, Billy Lung, investment strategist at Global X, explained how, unlike the surprise approval of a Bitcoin ETF in January, Ethereum's latest round of approvals is expected.

In light of that, he said, the significant price declines didn't completely surprise him.

"I watched this very closely before the ETFs were launched and what I saw was a lot of pre-positioning," he said.

"The Bitcoin ETF came as more of a surprise, but with the Ethereum ETF there was a lot of time for that, there was a lot of discussion."

In particular, Ethereum saw a boost in the days leading up to the first round of SEC approvals, Leung pointed out, with the cryptocurrency gaining 23.1% in the four days between May 20 and 24.

Ben Selermeier, co-chief investment officer at Magnet Capital, offered another theory, noting that Ethereum ETFs launched in a "much softer and more uncertain macro market."

Also, he explained, Ethereum is a more complex asset class to understand than Bitcoin, leading to more gradual adoption and a potentially smaller investor base to begin with.

“The investment case for Bitcoin, that is. digital gold, right now it's much clearer and easier for institutions to understand,” Selermeier told InvestorDaily.

"Ethereum is a public blockchain infrastructure that requires more understanding and knowledge of what the applications and revenue models are," he said, adding that investors naturally need more time to warm to a new investment thesis.

In the short term, he expects interest in Ethereum to potentially wane as investors adopt a wait-and-see approach.

"While macro uncertainty is high and regulatory conditions surrounding the Ethereum ecosystem remain uncertain, investors may simply be waiting for clarity," he said.

But Kellermeier noted that the fog should clear towards the end of 2024, amid US interest rate cuts and the upcoming election.

In particular, the U.S. election in November should provide insight into whether or not crypto will remain under a "hostile" Democratic administration, he said, or transition to a Trump administration that has already expressed support for the asset class.

Global X's Leung agreed that these two factors will prove key in determining Ethereum's price trajectory.

"As we go into the US interest rate cut, people may be using Bitcoin as a form of trading, hedged or unhedged, instead of Ethereum, so there is that complexity and divergence," he said.

Also, as the odds of Harris winning have increased, the crypto space is already showing nerves.

"Since Ethereum has a high beta, I think that will hit it hard as well," he said.

But for the investment strategist, the near-term uncertainty doesn't completely rule out Ethereum.

It's more of a "case of when, not if" Ethereum will see a rebound.

"In the near term, it's a lot harder to understand and the use cases haven't come out yet, but I think that's the bigger investment case for cryptocurrencies," Leung told InvestorDaily.

He also expects institutional investors to eventually enter this space and take advantage of the new ETF shell.

“As we discussed with the Bitcoin ETF, it's safer, it's easier, it's more affordable, there's more liquidity, these are all the same factors for the Ethereum ETF as well. I don't see any difference in preference,” Leung said.

"We've seen a lot of advisors and asset managers put our Bitcoin products on their listings, and it's only a matter of time before people realize that about Ethereum."