Ethereum Shows Resilience in Price Recovery
Ethereum (ETH) has seen a 37% increase in its price this year, although it remains significantly below its all-time high. Currently trading at $1,592, the cryptocurrency experienced a 2.67% decline in the past week. Its trading volume also dropped by 41.83% to $2.93 billion in the last 24 hours.
What’s Contributing to Ether Price Drop?
Experts attribute Ethereum’s subdued performance to its transition to the Proof-of-Stake (PoS) consensus algorithm, known as “The Merge.” While this transition brought improvements like reduced energy consumption and a deflationary model, it also led to an increase in liquid staking. Approximately 10% of the total Ethereum supply is now locked within platforms like Lido Finance, raising concerns about network centralization and impacting Ether’s performance.
In a report, JPMorgan analysts noted disappointing network activity with decreased daily transactions and active addresses, as well as a slump in decentralized finance (DeFi) on the blockchain.
Prominent crypto analyst Ali Martinez highlighted the absence of substantial buying activity among Ethereum whales, which could impact the market significantly.
ETH On-chain Fundamentals Remain Bullish
Despite these challenges, Ethereum has seen a drop in network fees, indicating increased utility. On-chain analytics firm Santiment reported that Ethereum’s network fees are at their lowest levels in 2023, standing at just $1.15 per transaction. Santiment believes that increased utility can lead to recovering market cap levels for Ethereum.
“Historically, we see utility begin rising as ETH becomes more affordable to circulate,” wrote Santiment.
To cultivate short-term bullish prospects, Ethereum must maintain support above the pivotal $1,615 level and aim for a surge toward the range of $1,850 to $1,900. A crucial support level to watch is at $1,500.
Hot Take: Ethereum Faces Challenges but Shows Promise
Ethereum has faced challenges in its price performance due to its transition to the PoS algorithm and concerns about network centralization. However, the cryptocurrency has recently seen a drop in network fees, indicating increased utility. This could lead to recovering market cap levels for Ethereum in the future. To achieve short-term bullish prospects, Ethereum needs to maintain support above key levels and aim for a surge in price. Despite the current obstacles, Ethereum shows promise as it continues to adapt and evolve.
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