Ether is disappointing a lot at the moment. Instead of climbing, Ethereum’s native crypto has fallen to a lower level. Its current value borders on the nightmares of 3 years ago. What are the reasons for this decline? Explanations!
ETH in free fall!
There were many betting on ether at $5,000, or even $8,000, after the success of the Shappella (Shanghai-Capella) upgrade. A survey conducted by OKX among 700 ETH traders in early March highlighted a high level of optimism regarding the fate of the prince of cryptos post-Shapella. ETH staking being the driving force behind this new bullish rally.
But this analysis of CoinTurk News will definitely put an end to daydreams. It actually highlights a brief, but crucial, descent of ETH between October 6 and 12. At that time, ether was valued at $1,520. Which represents its lowest level in 7 months, a replica of its achievements 3 years ago.
What had happened to cause Ethereum’s native token to go down to this point? First, there is this difficult bear market environment which complicates things. Under such circumstances, ETH hardly attracts new investors. And note in passing that validators have deserted the Ethereum waiting list. ETH staking seems to be in bad shape according to the latest statistics.
But by deepening our analyses, the widespread disinterest in cryptocurrencies did not fail to affect the price of ether. Google Trend data shows that searches for Ethereum have dropped drastically, if we take into account statistics from the last 3 years. Few people have ventured to type “Ethereum” into Google’s search engine since September, a period when the bear market was at its peak.
In other words, the current volume of searches regarding cryptos resembles that recorded during the year 2020. With further reflection, we can argue that even active investors have thrown in the towel. Otherwise, how can we explain the drop in cumulative volume to $14 billion?
Will the price of ether continue to fall?
It is difficult to rule out this thesis taking into account the following clues.
A drop in average transaction fees
Based on a compilation of 7 days of data, analysts have put forward a drop in transaction fees for Ethereum to $1.8. Still a very low level over the last 12 months. But a question arises: are ETH traders profiting from this drop in gas fees? More or less. Because the loss of value of ether does not help them.
An inflationary ether
With gas fees down to $1.8ETH has become inflationary. Explanations: in the post-Merge period, a fee burn mechanism was introduced in order to see a good quantity of ether burned with each transaction. However, this drop in transaction fees rhymes with a drop in ETH burned. As a result, ether becomes inflationary.
Note, however, that if low Ethereum transaction fees continue, there will certainly be an increase in supply. And unfortunately its price will continue to collapse, scarcity theory obliged.
Other information
Furthermore, we will cite these unflattering figures for Ethereum. For example, its total value blocked (TVL) which was 13.3 million ETH two months ago has just increased to 12.5 million ETH. Also, we must not ignore the decline in the activity of its decentralized applications (dApps) : Uniswap, OpenSea, etc.
Finally, the most optimistic crypto analysts can argue that ether seems to be out of the trough. Logically, the hard times are over. However, our colleague who recently delivered an in-depth analysis of the evolution of the price of ETH fears that if it remains above $1,600 for a very long time, a possible return to $1,500 is predictable.
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