Ethereum Struggles Amid Downturn: Competition and Market Corrections Impact Price
Summary:
After initially peaking at $3,972 after the approval of Ethereum ETFs, Ether has experienced a 10% decrease over the past week, a sharper decline than Bitcoin and the overall crypto market. The dip ignites questions about Ether's market trajectory and if it can recover. Contributing factors include the success of Bitcoin-specific US spot ETFs and upcoming decisions tied to CPI reading and FOMC meetings. Decreased activity on the Ethereum network and competition from platforms like Solana have also played a role. If Ethier can't maintain support at the $3,400 level, further decline may be expected.
Following the approval of Ethereum exchange-traded funds (ETFs) and an initial surge to $3,972, Ether (ETH) has disappointed recently, experiencing a 10% reduction in the past week. This dip is sharper than that of Bitcoin and the wider crypto market, sparking concerns on whether Ether's slide has ended. For comparison, Bitcoin's (BTC) value dipped by 6% during the corresponding timespan, while the comprehensive cryptocurrency market capitalization shrunk by 5.3%.
Several market and technical signals suggest that ETH could be facing further decline before a recovery attempt. Over the past week, ETH has seen a drop of 10%, performing worse than Bitcoin and other top-tier tokens. BTC has witnessed a 5.5% decrease over the past week, causing the ETH/BTC ratio to descend by 5.21% from 0.055 on 3rd June to 0.0513 on 11th June, its lowest point since 20th May.
Several factors are contributing to ETH's worse performance, including Bitcoin-specific influences in 2024. Bitcoin-specific US spot ETFs were successful, attracting almost $2 billion in capital influx last week. Additionally, upcoming decisions on CPI reading and FOMC meeting-based rate cuts have stimulated noticeable market corrections in recent months which have affected all crypto prices, including Ether.
There's also been a decrease in Ethereum's network activity in the past 90 days. Glassnode data shows a drop in the number of active daily addresses on the Ethereum network from 622,963 addresses on 20th March to 458,400 on 10th June, with a 1.2% reduction in the last 48 hours.
Even though Ethereum remains the leading network in the layer 1 area, Solana has been increasingly taking over its market portion in terms of on-chain activities. Ethereum's NFT volume has reduced by 9% over the past week to 105 million according to DappRadar data. This decrease in on-chain activities signals lessening demand for Ether and could potentially impact its price.
The latest downturn has forced Ether to lose a key support level around the $3,500 mark, which has now been turned into a resistance level. If seller activity peaks at this resistance level, Ether's value could potentially decrease further.
After peaking at $3,973 on 27th May, the ETH price has scaled back as profits were claimed and the overall crypto market suffered corrections. The value has since dropped 12% to the current price of $3,511. With the psychological support level at $3,400, Ether's value could potentially go down to $2,840 if this support fails. This represents a possible 18% decrease from the current price. This content is not meant as investment advice or suggestions; every investment and trading strategy carries risks, and individuals should conduct their own research before deciding.
Published At
6/11/2024 10:31:13 PM
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