Ether Price Hits Seven-Month Low as Investor Confidence Wanes
The price of Ether (ETH) has experienced a 7% decline from October 6 to October 12, reaching a seven-month low at $1,520. Although there was a slight rebound to $1,550 on October 13, it appears that investor confidence and interest in Ethereum are diminishing based on various metrics.
Some may argue that this movement reflects a broader disinterest in cryptocurrencies, as Google searches for “Ethereum” have reached their lowest point in three years. However, Ethereum has underperformed the overall altcoin market capitalization by 15% since July.
Regulatory Uncertainty and Lower Staking Yield Contribute to ETH’s Price Decline
One significant event that impacted Ether’s price was Cardano founder Charles Hoskinson’s remarks about the U.S. Securities and Exchange Commission’s classification of Ether as a non-security asset in 2018. Hoskinson alleged that some form of “favoritism” influenced the regulator’s decision.
Ethereum staking has also garnered less interest from investors due to a decrease in yield from 4.3% to 3.6% within two months. Additionally, there has been an increase in ETH supply because of reduced activity in the burn mechanism, reversing the previous scarcity trend.
On October 12, regulatory concerns escalated after the French Central Bank highlighted the risk of high concentration in decentralized finance (DeFi). The report suggested the need for specific rules governing smart contract certification and governance to protect users.
Derivatives Data and Dropping TVL Reflect Bearish Sentiment
An analysis of derivatives metrics reveals insights into how professional Ether traders are positioned following the price correction. The premium for Ether futures reached its lowest point in five months on October 12, indicating a lack of demand for leveraged long positions.
Ethereum’s total value locked (TVL) has decreased from 13.3 million ETH to 12.5 million ETH in the past two months, reflecting reduced demand. This decline in TVL is accompanied by decreasing activity in most ecosystem DApps, including leading platforms like Uniswap and OpenSea.
Hot Take: Ether Faces Potential Drop Below $1,500
Considering the reduced demand for leveraged long positions, declining staking yields, regulatory uncertainties, and a broader lack of interest, the likelihood of Ether dropping below $1,500 remains relatively high.
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