Ethereum, the second largest cryptocurrency by market value, goes through an approximate patch. According to Cryptokant crypto traderThe activity of the network has slowed down, putting Ethereum in a difficult position. Compared to Bitcoin, his performances dropped at levels observed for the last time in 2020, which made concerns concerning a possible price accident of 91%.
Why is Ethereum in difficulty?
Egyhash highlights the drop in network activity as the main cause of Ethereum problems. Since the start of the year, the number of active addresses has dropped regularly. This slowdown has led to a drop in transaction costs, which affects the overall value of Ethereum.
Blockchain data confirm this trend. Average transaction costs and Block costs have reached low recordsmake Ethereum less profitable for validators. This, in turn, weakened his ecosystem.
Whales sell billions
The confidence of investors in Ethereum also slips. Santiment data reveals that large investors, known as whales, sold 760,000 ETH – Worth about $ 1.42 billion, in just two weeks.
Whale activity has dropped 63.8% in the past five weeks, which is a worrying sign. If large investors continue to sell, Ethereum could face more downward pressure and a major sale.
The concerns of inflation increase
Ethereum’s deflationary mechanism, which burns the transaction costs to reduce supply, has weakened due to the lower network activity. Since the Dencun upgrade, The burning rate fell to its lowest level Car Ethereum has moved to proof of bet. This has increased the offer and added inflationary pressure, which could further affect the price.
Egyhash warns that unless the activity of the network and the transaction costs resume, Ethereum will find it difficult to maintain its value. If inflation continues to increase more quickly than demand, the price could remain under pressure for a long time.
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A 91%crash? The analyst issues a warning
Crypto analyst Ali Martinez raised alarms on a potential collapse of Ethereum against Bitcoin. Based on the ETH / BTC table, he predicts that Ethereum could drop by 91% if a lowering model takes place.
Martinez explains that when she returned upside down, the graph reveals a high double model, which often signals a major drop. If this model is valid, ETH / BTC could fall to 0.0020 BTC.
Currently, Ethereum is negotiated at 0.02153 BTC ($ 1,766). A drop to 0.0020 BTC would be devastating for holders.
Despite the concerns, there is still a chance for a rebound. If Ethereum holds above the support level of $ 1,800 and starts to recover like Bitcoin, it could exceed the resistance levels of $ 1,900 and $ 1,950.
Ethereum is at a critical moment. Its future will depend on the improvement of network activity and the confidence of investors. Until then, the risk of new losses remains high.
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Faq
The price of the ETH drops due to the low activity of the network, the reduction of transaction costs, whale sales and the inflationary pressure of the Dencun upgrade.
Dencun lowered the rate of Ethereum burns, increasing inflationary supply and pressure, which could further weaken the price stability of the ETH.