Ethereum's Price Drops Amid Rise in Crypto Market Liquidations and Increased Exchange Deposits
Summary:
Ether's price has seen a significant drop of over 9% from April 1 to April 5, mirroring the trend of Bitcoin (BTC). This decline is linked to increasing liquidations in the cryptocurrency derivatives market, reduced total value locked (TVL) and volume on the Ethereum network, and a growing supply of Ether on exchanges due to major investors' actions. Notable Ethereum investors have been reducing their holdings, anticipating short-term price declines. As Ether's price dropped below certain thresholds in late March and early April, deposit transactions to known exchange wallets significantly increased, indicating a potential intent to sell.
In recent news, the price of Ether (ETH) has seen a significant decline of more than 9% from April 1 to April 5, causing it to hover close to the $3,300 mark. This drop in Ether’s value has mirrored the trend in Bitcoin (BTC), which also fell under the $70,000 threshold on April 1, marking a 5% decrease during the same period. The shift in Ether’s price reflects the increasing liquidations in the wider cryptocurrency derivatives market, reduced volume and total value locked (TVL) on the Ethereum network, and a surge in Ether’s supply on exchanges due to major investors.
Ether’s price fall is paralleled by increased liquidations in its derivatives market. As per data from Coinglass, Ether long positions worth over $50.7 million were liquidated within the past 24 hours, with $24.7 million cleared out in the preceding 12 hours. In the overall crypto market, about $264.7 million worth of leveraged positions were liquidated, with the majority ($185 million) being long positions.
The contraction in ETH price is coupled with reduced volume on the Ethereum network, which has fallen 10% over the past week. This volume drop occurs in the wake of the Decun upgrade, which was successfully launched on March 13. Alongside Ether’s price plunge, the Ethereum network’s TVL also saw a decrease, registering a 1.5% decline over the last 24 hours and 5.5% in the past week. The current TVL for Ether, standing at $47.9 billion, is significantly lower than its highest mark of $106 billion recorded on November 13, 2021.
Major Ethereum investors have started to reduce their ETH holdings in expectation of short-term price declines. Santiment, a market intelligence company, indicates that wallets holding between 10 million and 100 million ETH decreased from 30.56% on March 30 to 27% on April 5. In fact, during the past week, the percentage of those holding between 1 million and 10 million ETH has fallen rapidly from 7.6% to 7%.
A surge in ETH deposits on exchanges supports the shrinkage of notable Ether investors. As per Glassnode data, deposit transactions to recognized exchange wallets began to accelerate on March 26, when the ETH price went under $3,600. The rate of deposits to exchanges went on rising on April 3 as ETH dropped below $3,200, escalating from 20,419 transactions to 35,887 on April 5. The increased transfer of Ether to exchanges suggests a willingness to sell, a typically bearish indicator. Consequently, many significant transactions moving Ether to exchanges have been recorded. For instance, on April 5, blockchain tracker Whale Alert marked several transactions moving substantial amounts of Ethereum from individual wallets to exchanges, such as one holder transferring 9,840 ETH (valued at $32.25 million) from an undisclosed wallet to Coinbase crypto exchange and another depositing 22,975 ETH (worth $76.5 million) from an unknown wallet to Coinbase Institutional. This article offers no investment advice or suggestions. All investments and trading moves carry risk, and it is advised that individuals conduct their research before making decisions.
Published At
4/5/2024 9:08:47 PM
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