Ether Faces Price Drop Amidst Increased Coin Issuance, Sales, and Disappointing ETF
Over the course of a week, Ether (ETH), the native token of the Ethereum network, has seen an 8.2% decline in its price. This drop can be attributed to various factors such as an increase in coin issuance, sales by Vitalik Buterin, and a disappointing start for the futures-based exchange-traded fund (ETF) instrument.
Ether Supply Increase Challenges “Ultrasound” Theory
In 2022, the Ethereum network underwent significant upgrades that changed its coin issuance mechanism. These changes resulted in a reduction in the number of new Ether tokens issued and introduced a burn mechanism to decrease the supply of ETH. This new supply schedule has been referred to as “ultrasound money.”
However, the unpredictability of this monetary policy became evident when the coin issuance equation experienced an inversion in September 2023. The decreased network activity led to an increase in ETH supply by 30,064 ETH in the past 30 days due to reduced burning.
Vitalik and Ethereum Foundation’s Sales Raise Concerns
Vitalik Buterin has sent 3,999 ETH to exchanges in the past five weeks, sparking speculation within the community. The most recent transaction suggests that ETH was likely exchanged for fiat currency. Additionally, the Ethereum Foundation converted 1,700 ETH into stablecoins for regular operational expenses.
Dwindling Demand for ETH Futures ETF
A crypto wallet address associated with the FTX exploiter moved a significant amount of ETH to THORChain router and converted it into tBTC. This move prompted THORSwap to suspend conversion transactions. The conversion into Bitcoin suggests an anticipation of higher returns in fiat currency terms. Ether’s underperformance against Bitcoin and the weak demand for Ethereum futures-based ETFs also contribute to negative sentiment surrounding ETH.
Hot Take: Negative Factors Weighing on Ether’s Price
Ether has been facing a series of negative factors that have impacted its price performance. These factors include increased regulatory risks, the resumption of net coin issuance, sales by Vitalik and the Ethereum Foundation, and weaker-than-expected demand for the futures-based ETF. As a result, Ether has experienced a recent decline in value.
Sources:
Arkham analytics,
Twitter
Hot Take: Negative Factors Weighing on Ether’s Price
Ether has been facing a series of negative factors that have impacted its price performance. These factors include increased regulatory risks, the resumption of net coin issuance, sales by Vitalik and the Ethereum Foundation, and weaker-than-expected demand for the futures-based ETF. As a result, Ether has experienced a recent decline in value.
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