{"id":51201,"date":"2023-05-16T23:27:56","date_gmt":"2023-05-16T23:27:56","guid":{"rendered":"http:\/\/egrowonline.com\/?p=51201"},"modified":"2023-05-16T23:27:56","modified_gmt":"2023-05-16T23:27:56","slug":"3-reasons-why-ethereum-price-could-struggle-at-the-1-9k-level","status":"publish","type":"post","link":"http:\/\/egrowonline.com\/?p=51201","title":{"rendered":"3 reasons why Ethereum price could struggle at the $1.9K level"},"content":{"rendered":"


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Since May 12, Ether\u2019s price has been struggling to sustain its $1,800 support level, as investors face pressures from a worsening crypto regulatory environment and the Ethereum network\u2019s high gas fees. Also negatively impacting Ether\u2019s (ETH<\/a>)\u00a0price are three indicators signaling reduced demand for its decentralized applications (DApps) and a lack of leverage buying demand from professional traders.<\/p>\n

Regulators signal their plan to further limit crypto intermediaries<\/h2>\n

According to court documents filed on May 15, the United States Securities and Exchange Commission (SEC) has given a formal response in court in relation to Coinbase\u2019s petition for clear crypto regulation. The SEC stated that any rulemaking may take years<\/a> and that enforcement actions will continue in the meantime.<\/p>\n

On May 16, the Economic and Financial Affairs Council of the European Union \u2014 comprising finance ministers of all member states \u2014 approved the highly anticipated Markets in Crypto-Assets (MiCA) regulation<\/a>, which will come into effect by mid-2024. <\/p>\n

Some argue that MiCA facilitates business growth in the region. Others focus on the privacy risks for personal users\u2019 data and the risks imposed on non-custodial solutions<\/a>, including decentralized finance applications.<\/p>\n

The drop in DApp deposits is concerning<\/strong><\/p>\n

The Ethereum network is experiencing problems caused by surging gas fees \u2014 the cost associated with transactions, including those performed by smart contracts. For the past four weeks, the average transaction fee has stood above $9, which severely limited the demand for DApp usage.<\/p>\n

Total deposits on the Ethereum network in Ether terms plunged to their lowest levels since August 2020. Such an analysis excludes the effects of native Ethereum staking, which recently started to allow withdrawals.<\/p>\n

Ethereum network applications’ total deposits in ETH. Source: DefiLlama<\/em><\/figcaption><\/figure>\n

According to DefiLlama data, Ethereum DApps reached 14.9 million ETH in total value locked (TVL) on May 16. That compares with 16.5 million ETH two months prior, a 10% decline. As a comparison, TVL on BNB Smart Chain in BNB (BNB<\/a>)\u00a0terms was essentially flat in the same period, while Polygon (MATIC<\/a>) deposits on the Polygon network increased by 29%.<\/p>\n

BNB Smart Chain attempts to take a lead in DEX volume<\/h2>\n

Ethereum might have been the absolute leader in decentralized exchange (DEX) volume since its inception, but this position is being challenged. Ethereum\u2019s market share by volume on DEXs peaked at 75% in the week ending March 5 but steadily declined to its lowest level ever, 39.6%, in the week ending May 14.<\/p>\n

Weekly DEX volume by chain. Source: DefiLlama<\/em><\/figcaption><\/figure>\n

Gainers since March 5 on DEX trading volume were Arbitrum, increasing to 14% from 7%, and BNB Smart Chain, growing to 31% from 5.6%. One might argue that the success of the Ethereum network\u2019s scaling solutions reflects bullishness for Ether\u2019s price, but that relationship is not so direct.<\/p>\n

Related:\u00a0Updated European tax directive requires reporting on all crypto asset transfers<\/a><\/em><\/strong><\/p>\n

Data shows pro traders turning bearish<\/h2>\n

Ether quarterly futures are popular among whales and arbitrage desks. However, these fixed-month contracts typically trade at a slight premium to spot markets, indicating that sellers are asking for more money to delay settlement.<\/p>\n

As a result, ETH futures contracts in healthy markets should trade at a 5 to 10% annualized premium \u2014 a situation known as contango, which is not unique to crypto markets.<\/p>\n

Ether 3-month futures annualized premium. Source: Laevitas<\/em><\/figcaption><\/figure>\n

Ether professional traders have avoided leverage longs (bullish bets) since early April. Moreover, the current 1% ETH futures premium is on the edge of becoming negative, known as backwardation \u2014 if confirmed, this is an alarming red flag, as bearish demand dominates the scene.<\/p>\n

In short, these three indicators \u2014\u00a0namely, the reduced TVL, record-low DEX market share and lack of leverage buying demand \u2014 signal the $1,900 resistance will be hard to break in the short term. For now, Ether bears are in control, favoring the odds of a price correction.<\/p>\n

This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author\u2019s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.\n<\/p>\n

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.\n<\/p>\n<\/div>\n


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Since May 12, Ether\u2019s price has been struggling to sustain its $1,800 support level, as investors face pressures from a worsening crypto regulatory environment and the Ethereum network\u2019s high gas fees. Also negatively impacting Ether\u2019s (ETH)\u00a0price are three indicators signaling reduced demand for its decentralized applications (DApps) and a lack of leverage buying demand from […]<\/p>\n","protected":false},"author":1,"featured_media":51202,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","enabled":false}}},"categories":[41],"tags":[9407,158,664,195,660,1649],"class_list":["post-51201","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-ethereum","tag-19k","tag-ethereum","tag-level","tag-price","tag-reasons","tag-struggle"],"jetpack_publicize_connections":[],"jetpack_sharing_enabled":true,"jetpack_featured_media_url":"http:\/\/egrowonline.com\/wp-content\/uploads\/2023\/05\/357f6eb1-b7ac-43bd-bf69-bffa8d9ee975.jpg","_links":{"self":[{"href":"http:\/\/egrowonline.com\/index.php?rest_route=\/wp\/v2\/posts\/51201","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/egrowonline.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/egrowonline.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/egrowonline.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"http:\/\/egrowonline.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=51201"}],"version-history":[{"count":1,"href":"http:\/\/egrowonline.com\/index.php?rest_route=\/wp\/v2\/posts\/51201\/revisions"}],"predecessor-version":[{"id":51203,"href":"http:\/\/egrowonline.com\/index.php?rest_route=\/wp\/v2\/posts\/51201\/revisions\/51203"}],"wp:featuredmedia":[{"embeddable":true,"href":"http:\/\/egrowonline.com\/index.php?rest_route=\/wp\/v2\/media\/51202"}],"wp:attachment":[{"href":"http:\/\/egrowonline.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=51201"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/egrowonline.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=51201"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/egrowonline.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=51201"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}