New drops in sight for Ethereum

While Bitcoin’s price has been hovering around the $30,000 mark for about a month and a half now, Ethereum’s price crossed the fateful $1,800 threshold on Thursday, suggesting it may be starting to perform worse than the rest of the market.

Ethereum price breaks a significant support level 

The news that a major Singapore-based crypto hedge fund, Three Arrow Capital, sent 32,000 ETH worth about $60 million to the FTX cryptocurrency exchange within an hour two days ago certainly increased speculation that the price could fall further in the coming days.

The hedge fund’s transfer to a wallet in which around 26,000 ETH had been deposited months earlier implies that the fund is preparing to sell these coins in exchange for other currencies.

It is clear that such an asset sale could not fail to have serious repercussions for the price of ETH.

dump eeth? https://t.co/7xdI80P8rZ

— Tim Copeland (@Timccopeland) May 30, 2022

In addition, according to data held by the company Glassnode, the number of Ether held by the major cryptocurrency exchanges decreased in May.

In fact, the balance of ETH has dropped from 20.45 million to 20.38 million since the beginning of the month.

Then again, it is also worth adding that although ETH has had a tumultuous few weeks that clearly stemmed from the negative state of the entire industry, its performance is still astounding and higher than any other cryptocurrency, including Bitcoin. For those who invested in ETH in 2015, the return on investment (ROI) is over 700,000%. 

Future prospects for the entire Ethereum ecosystem

According to many analysts and experts, ETH continues to remain the preferred long-term cryptocurrency to invest in, precisely because of its applications in the DeFi, NFT and metaverse sectors.

At the beginning of the month, the blockchain went into meltdown due to the huge traffic caused by the launch of a new metaverse by Yuga Labs. The great American director Ridley Scott is even considering making a film about the genesis of Ethereum and its founder Vitalik Buterin.

Despite all this, some elements of technical analysis also point to new declines for ETH. The failure to break resistance at 1920 dollars and the sudden drop below 1800 dollars is a clear signal that could mean a new sell-off for Buterin’s currency. 

There is even a risk that the market may want to test the $1400 threshold, from where a new rise could then start.

On the other hand, the breaking of the $1,800 mark twice in May leaves little room for the illusion of seeing ETH soon above $2,000 again.

There are still many unknowns to be able to make reliable forecasts. Some clearly relate to the general economic and geopolitical situation. 

Others, on the other hand, are related to Ethereum’s business itself, which in these early months of 2022 seems to be suffering a definite setback from both the NFT and DeFi sectors. This is due in particular to fierce competition from other cheaper and faster blockchains such as Solana, Cardano and Avalanche.

The fact that in recent days the average gas fee has dropped to its lowest level since July 2021 is also a clear sign that the market is slowing down. 

It remains to be seen whether indeed the long-awaited Arrow Glacier update, which should make the blockchain more secure, faster and cheaper, will be able to give the stock the push it needs to return to the $4500 highs touched in November.