Thursday, May 23, 2024

Ethereum Tumbles Amid Wider Market Downturn, Bearish Sentiment Grows.

The impact of Hong Kong’s spot ETH acceptance was muted on Tuesday by anxieties around a possible Iran-Israel conflict, which caused Ethereum’s (ETH) price to temporarily fall below $3,000. Notwithstanding the price crash, the recent suggestion to reduce ETH issuance has resurfaced in the wake of a report by research firm Glassnode.

Market movers for the day: ETH issuance, liquidated long positions, and risk reversal dips

Ethereum is once again the talk of the cryptocurrency world, drawing more attention to itself. Your main market movers are as follows:

  • According to QCP Broadcast, investors in Ethereum are becoming more apprehensive as ETH risk reversals dropped 20% on Tuesday. Bulls in the cryptocurrency space are generally cautious because losses have been reported for Bitcoin and other altcoins since the Iran-Israel dispute gained traction. Additionally, QCP shows that the market is shorting ETH gamma, which suggests that a significant move in either direction could be exacerbated.
  • According to data from Santiment, the second-largest digital asset experienced an increase in talks after the Hong Kong spot ETH ETF clearance, making it the most trending token among traders. ETH shorts have climbed by 54% despite the increased attention, reflecting the growing pessimism surrounding the digital asset.
  • This is confirmed by the liquidation heat map of the cryptocurrency market, which shows that Ethereum has seen liquidations of over $81.9 million in the last day, based on Santiment data. Sixty-seven.4 million of the total ETH liquidations are attributed to liquidated long positions, the largest of which is an ETH-USD swap valued at $6 million.
  • Despite explanations that the goal is to preserve Ethereum’s standing as money and a balance in the network’s governance power, the Ethereum Foundation’s proposal to decrease ETH issuance is nevertheless met with opposition, according to Glassnode.
  • The emergence of liquid and restaking tokens raises the rate of inflation of ETH and affects a number of ETH holders. Otherwise, according to Glassnode, there is a wealth transfer occurring from a declining pool of non-staked ETH holders to an expanding pool of staked ETH holders.
  • Therefore, due to their noticeably higher yields, the “real yield” may lead the “role of money” in the Ethereum ecosystem to change from ETH to liquid staking tokens or restaking tokens. According to Glassnode, one unintended consequence of this evolution would be that the projects issuing these derivative tokens would obtain disproportionate control over the stability and governance of Ethereum’s consensus and execution layers.

Technical analysis: Ethereum will trade below $3,301.

In the last day, Ethereum bears have gained ground as the price of the cryptocurrency has struggled to rebound from the weekend low. Following a brief increase towards $3,300 on Monday, it was anticipated that it would continue to move sideways between $3,210 and $3,406 per share. But ETH continued to fall, eventually stabilising at the $3,000 support level.

Given the present volatility, ETH might trade between the Saturday-formed ranges of $2,852 and $3,301. If the market rises above the range, it can surpass the $3,406 resistance level from April 7 and test the $3,618 pivotal level from April 11. ETH will continue to rise, maintaining its positive momentum. But if ETH breaks below the range, a negative trend will begin.

This thesis will be impacted by three things: the impending halving of Bitcoin, a possible conflict between Iran and Israel, and the Securities and Exchange Commission’s (SEC) decision regarding a spot Ethereum ETF.

As of this writing, Ethereum is trading close to the $3,000 support level.

Cryptured Team
Cryptured Team
The writers team at Cryptured.com is composed of passionate and experienced journalists who cover the latest developments in the crypto and blockchain space. They aim to provide accurate, unbiased and easy-to-understand news and information for their readers, as well as insights and analysis from industry experts. The writers team is always on the lookout for new and exciting stories that can help the general public learn more about the potential and challenges of these technologies.
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