Ether Price at Risk of Losing $1.6K Support as Multiple ETH Price Metrics Decline
Ether’s price has experienced a significant surge of 31.3% from March 10 to March 18, which coincided with the injection of $300 billion by the Federal Reserve to address Silicon Valley Bank’s insolvency. Since then, Ether’s price has maintained a daily closing price above the $1,600 support level.
However, there are concerns among investors regarding Ether’s ability to sustain this support level, given the prevailing bearish sentiment in the cryptocurrency market and the declining metrics on the Ethereum network.
Declining Demand Reflected in On-Chain Metrics
Several factors contribute to the skepticism surrounding Ether’s price. First, Ethereum’s on-chain metrics indicate a stagnation in demand, both in terms of ETH investments and smart contract transactions.
The number of Ethereum addresses holding a minimum of $1,000 worth of ETH deposits has reached its lowest level in nearly six months. This is particularly concerning considering that Ether’s price reached a peak of $2,130 in mid-April, which should have attracted new investors.
The lack of investor interest can be attributed, in part, to Ethereum’s average transaction fee, which has remained above $4 for the past six months. Despite fluctuations in network staking metrics, there has been no noticeable increase in the total number of investors when using the $1,000 threshold as a proxy.
Moreover, decentralized applications (DApps) on the Ethereum network also reflect a dearth of new users. The average number of active addresses across the top Ethereum network DApps has decreased by 4% compared to the previous month. Every sector, from cryptocurrency games to decentralized exchanges, nonfungible token marketplaces, and Web3 services, has witnessed a decline in the number of active users.
- Ethereum’s network is currently constrained by high transaction fees, limiting the number of active users.
- Without an increase in network activity, catalysts for a price recovery, such as potential network upgrades and implementations that could lead to lower costs or enhanced user privacy, are lacking.
Competitors Capitalizing on Stablecoin Volumes
Rival platforms such as Solana are benefiting from recent developments in the cryptocurrency market. For instance, Visa has integrated Solana blockchain settlement capabilities, and Coinbase is assisting partners in converting old versions of USD Coin (USDC) to the new format. Additionally, Rune Christensen, co-founder of MakerDAO, has proposed developing the project’s upcoming native chain based on Solana’s codebase, despite its historical affiliation with Ethereum.
Given the overall bearish sentiment in the cryptocurrency market, including legal challenges faced by exchanges from the SEC and diminishing interest in cryptocurrencies, there is an increased likelihood of Ether’s price dipping below the $1,600 support level.
This article is for general information purposes and does not constitute legal or investment advice. The views, thoughts, and opinions expressed here are solely those of the author and do not necessarily reflect the views and opinions of Cointelegraph.
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