ETHER (ETH) prices surged 14.2% after rebounding at $ 2,000 on March 4, but struggled to maintain $ 2,200. In particular, ETH has increased the larger cryptocurrency market over the past two weeks and reflects investor uncertainty. To regain optimistic momentum, you need to solve major obstacles.
Ether/USD (left) Grand encryption cap, USD (right). Source: TradingView / COINTELEGRAPH
It is difficult to find exactly why Traders’ exact reason is to reduce ETH exposure, but it is likely that some factors have contributed to weak feelings. This includes a decrease in Onchain activity, a total value lock (tvL), a net positive ETH issuance rate, and a conjecture surrounding the potential US strategic digital asset protection area. Overall, the demand for ETH seems to be weak as an indigenous token of Ethereum.
Weak onChain activities, spot ETF leaks and ETH supply growth increases
Etter investors can increase institutional capital competition as Solana (SOL) is likely to secure approval for US SPOT exchange transaction funds (ETFs). Currently, only Bitcoin (BTC) and ETH remains this state, but Ether ETFS has won $ 333 million in net leaks between February 19 and March 4. This emphasizes weak ETH performance, but looks more than the main cause.
It is essential to analyze Ethereum’s Onchain Metrics to understand the main drivers of Ether’s performance.
7 days diversified exchange volume, USD. Source: Defillama
Ether Leeum Network maintains leadership in the 7 -day distributed exchange (DEX) volume, reaching $ 22.4 billion. But especially when Solana increased 4% over the same period, the gap with competitors narrowed. According to Defillama data, Ether Lee’s main weakness was that the curved financing activity decreased by 49% and the amount of pens decreased by 16%.
Similarly, Ether Lee’s total value lock (tvL) has raised concerns about whether ETH can surpass the wider cryptocurrency market in the short term, with a 13% decrease in two weeks. In contrast, BNB chain’s TVL decreased 8% in the same period, but $ 5.1 billion was quite small.
Ether Lee Reeum total value lock (tvL), USD. Source: Defillama
UNISWAP has achieved the weakest achievements in Etherrium deposits, and total value locks (TVL) have fallen 22.5% over 30 days. Other notable reductions include Ether.fi (-18.8%), LIDO (-17.3%) and MORPHO (-17%).
Due to the slowing of Ether Lee’s OnChain activity, we have created an abnormal scenario for the first time since July 2020, where the average transaction fee fell to less than $ 1. However, the demand for blockchain processing is still weakened and the ETH supply has increased. The image mechanism introduced by the EIP-1559 was greatly offset by the expansion of the BLOB space for the Layer-2 extension solution.
30 days ether supply change. Source: Ultrasound. money
relevant: Bitcoin will continue to be integrated in this full back stage -analystist
It is still unclear whether the upgrading ‘PECTRA’ network upgrade can maintain the balance of fee distribution of the Etherum ecosystem. But later, more adjustments will be needed. In addition, the US Secretary of State Howard Lutnick confirmed that Bitcoin will receive a “unique position” according to Donald Trump’s plan.
On March 7, the first White House encryption summit will collect the best industry executives, founders and investors with the president’s representative on the president’s digital assets. They will discuss the regulatory plan and Trump’s proposed encryption strategy reserves. Traders are now worried that ether is unlikely to be included as a major asset, which can limit the possibility of ETH.
This article is for general information purposes and should not be considered legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.