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Cryptogambling / ETH price pinned below $1.9k for three reasons

ETH price pinned below $1.9k for three reasons

Publish Date: 24/05/2023
Key Points
  • Ethereum price struggling to rise above $1.9k.
  • Investors are starting to lose interest due to high transactional fees and other factors.
  • Ethereum might not hit a high mark in the short term.

Ethereum prices are pinned below $1.9k and it is likely not to chain in the short term.

This development seems to bother the crypto community, especially since the latest breakout attempt on May 6 which lasted less than 24 hours.

On May 22, JPMorgan Chase CEO, Jamie Cimon disclosed that due to bankruptcies on the rise, it might be difficult to ascertain the outcome of the Federal Reserve’s Monetary policy, since it is designed to reduce inflation.

Based on this, it is worth noting that the Ethereum network’s $8.80 average transaction fee might be responsible for reduced investor appetite for the network.

Supporting this submission, Dimon, a CNN reporter added:

“You’re already seeing credit tighten up because the easiest way for a bank to retain capital is not to make the next loan.”

However, three factors are responsible for the price challenge facing Ethereum. They are:

Joe Biden Administration and U.S Congress Disagreement

The recent uncertainty emanating from Joe Biden, the United State President’s firm disapproval of the deal that might save crypto traders is a probable cause of the worsening Ethereum situation on the price chart.

This has also worsened sentiments among institutional investors towards cryptocurrencies.

According to the CoinShares report, over the last five weeks, digital asset investment products saw outflows totalling $232 million.

In addition, there are two signs that have an effect on the price of Ether and indicate a decline in interest in its decentralized financial environment, as well as a lackluster professional trader leverage buying activity.

Instability in Total Ethereum Deposits

The Ethereum network has been grappling with its constrained processing capabilities, resulting in elevated gas fees that significantly dampen the demand for smart contract utilization. Over the course of the past five weeks, the average transaction fee has consistently exceeded $8, despite initial perceptions of negligible consequences.

The network’s total value locked (TVL) has remained steady at 15.1 million ETH compared to four weeks ago, but it is edging closer to its lowest levels since August 2020. Meanwhile, the TVL on the BNB Smart Chain, measured in BNB terms, showed little change over the same period, while TRX deposits on the Tron network witnessed a decline of 12%.

BNB Smart Chain Leads Ethereum inΒ  Dex Volume Flip

The Ethereum network has shown a drastic drop from a 75.5% peak in the Dex market on March 5 to 22.3% on May 21. Unlike the BNB Smart Chain which had climbed from 61.1% to 5.6% as the biggest beneficiary.

Also, there seems to be a reduction in active addresses interacting with decentralized applications (DApps). In the last 30 days, the top 12 DApps running on Ethereum have seen an 11% drop possibly confirming investor’s dissatisfaction with high transactional costs.

In addition, Ether professionals are avoiding leveraging long (bullish bets) on the platform. This implies that the brief rally on May 6 towards $2,000 wasn’t enough to flip the whales and market makers into bullish sentiments.

Final Note

In short, it is safe to say that Ethereum investors might be needing a push or a form of motivation because as it is, it sees that users are beginning to lose interest in the former leader in decentralized exchange (DEX).

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