The value of Ethereum, a decentralized smart contract token, is losing 5.8% daily and is currently trailing Bitcoin’s price volatility. Earlier in the week, the price of ETH surged 7% higher than his, prompting some investors to cash in their profits quickly. At the time this article was written, the price of 1 Ether was $1,196.
Ether price hit a high of $1,349 before the bears dominated the market. There has been a recent correction to the dip that occurred below the $1,320 level. The price started at a swing low of $1,240 and fell below the 23.6% Fib retracement level of the most recent wave, which reached a high of $1,349.
CryptoQuant Talks About Ethereum
Well-known on-chain analytics provider CryptoQuant recently share Some new insights on the second largest cryptocurrency. According to CryptoQuant’s analysis, Ethereum could be sold for two main reasons.
The first reason is the sharp increase in the amount deposited into Ethereum 2.0 deposit contracts. These funds will remain frozen until the Shanghai hard fork is completed.
Secondly, as highlighted by analysts, the total amount of ETH locked in contracts so far amounts to around 12% of the total supply of Ethereum.
CryptoQuant says:
“From a short-term perspective, there are higher APY strategies than depositing ETH2 and staking rewards that may not be guaranteed to be withdrawn.”
Additionally, the data reveals a steady decline in the number of depositors to below-average levels. According to data previously disclosed by Ethereum, the latter is expected to take place within a year from the merge event held in mid-September, i.e. March 2023.
The analyst added:
“Supply and demand dynamics will change after the fork and $ETH price volatility is imminent. Will Shanghai be a catalyst for mass selling or an opportunity to provide liquidity to buy more ETH? mosquito?”
The following reasons are related to ETH 2.0 deposits and balances. CryptoQuant observed a 57% decrease in the number of deposits in 2022 compared to 2021. However, the total amount deposited is similar to the previous year. So, in 2022 he has increased his total per deposit by 133%.
Experts then discuss Ether exchange reserves as the next potential reason. A decrease in the ETH exchange reserve may result in an increase in the ETH 2.0 balance. About 18 million ETH, or 15% of the total supply, is currently held on exchanges. However, Ether exchange reserves are continuously declining.
Last but not least is the decline in Ethereum supply that began following The Merge. After the fork, the supply and demand will be out of balance and the price of ETH will fluctuate. On top of that, CryptoQuant pondered whether the Shanghai hard fork would trigger a mass sale or an opportunity to provide more liquidity and buy more Ether.
Community reaction
This concludes our analysis of CryptoQuant. You definitely correctly guessed that this caused a split in the cryptocurrency community.
who Said There is currently no certainty that withdrawals will be approved by March next year, and precedent indicates that a currency with Ethereum characteristics cannot withstand such intense selling pressure.another person Said At its current price of $1000, Ether is “not worth it right now,” he said.
If Ethereum fails, there could be more problems in the sector. I hope it never comes true. I can only hope my analysis is correct.
