Ether Struggles at $1,900 Resistance Amidst Regulatory Challenges and Decreased Network Activity
Summary:
The price of Ether (ETH) has seen a 6.2% surge over two days, but it struggles to break the $1,900 resistance. Regulatory challenges revolving around Consensys and the Ethereum ecosystem have contributed to Ether's underperformance compared to Bitcoin (BTC) and other altcoins like Solana (SOL), XRP, and Cardano (ADA). High transaction costs and decreased total deposits on the Ethereum network have exacerbated these issues. The data indicates these challenges might make breaking the $1,900 resistance more difficult than initially expected for ETH.
Within a span of two days, from November 3 to November 5, the price of Ether (ETH) increased by a notable 6.2%. Nevertheless, this cryptocurrency struggles to overcome the resistance at $1,900. Despite a bullish sentiment, Ether's returns of 17% over the past month do not match up to Bitcoin's (BTC) remarkable 27% over the same timeframe. As expected, ETH is struggling due to concerns about Consensys and possible centralization of the ecosystem.
In the Ethereum universe, Consensys holds a pivotal role. However, the organization and its co-founder, Joseph Lubin, are entangled in a lawsuit filed by prior employees. More than twenty shareholders of the Swiss firm Consensys AG assert that Lubin, who co-founded Ethereum too, broke a "no-dilution promise" he gave in 2015. The controversy adds to the uncertainty already present because of rulings by the High Court of Zug in Switzerland that were in favor of these plaintiffs.
Regulatory obstacles have also stunted the growth of the Ethereum ecosystem. The most recent worry revolves around PayPal's stablecoin, PYUSD, which is pegged to the U.S. dollar and operates on the Ethereum network. Further fueling these regulatory issues, the Ethereum network faced criticism over its decentralized finance (DeFi) applications' level of decentralization.
Some major altcoins, such as Solana (SOL), XRP, and Cardano (ADA), have significantly outperformed Ether in the past month with returns of 75.5%, 37%, and 35% respectively. This divergence indicates that the factors hindering ETH are not exclusively connected to regulatory scrutiny or diminishing demand for DeFi and NFT markets.
Ethereum is grappling with high transaction costs, especially for transactions conducted through smart contracts. Another concern is the decreasing total deposits on the Ethereum network, specifically measured in Ether. These deposits have reached their lowest since August 2020.
As of November 5, according to data from DefiLlama, Ethereum's decentralized applications (DApps) had a total value locked (TVL) of 12.7 million ETH. This number is down 4% from 13.2 million ETH two months ago. Notably, this analysis does not account for the impact of Ethereum's native staking.
On-chain activity reveals an increase in user deposits of ETH at exchanges. The data shows that reduced TVL, diminishing DApps activity, and a spike in ETH exchange deposits might make Ether's quest to break the $1,900 resistance even tougher than anticipated. As it stands, it looks like those who are bearish on Ether might be able to breathe easy for now. The views, ideas, and opinions discussed here belong solely to the author and should not be interpreted as legal or investment advice.
Published At
11/6/2023 4:20:06 PM
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