Bitcoin has recently shown a strong upward trend, repeatedly attempting to break through the resistance range between 28000 and 28500. Compared to this, Ethereum's performance is relatively weak, with only one attempt to break through the resistance level of 1750

Bitcoin has recently shown a strong upward trend, repeatedly attempting to break through the resistance range between 28000 and 28500. Compared to this, Ethereum's performance is relatively weak, with only one attempt to break through the resistance level of 1750. This article will briefly analyze the recent price trends of Ethereum and the factors that may affect this trend.

ETH/BTC: In a declining state since MERGE in 2022

In the past year, Ethereum (ETH) has performed weaker compared to Bitcoin (BTC). From the beginning of 2022 to June, the ETH/BTC trading pair has been in a downward trend, dropping from 0.081 to around 0.050. Then, due to the positive news of ETH's "merge" upgrade, prices rebounded and rebounded to around 0.8 by September 2022. However, since the upgrade of the 'merge', the ETH/BTC trading pair has shown an overall downward trend, currently around 0.058, approaching the weekly 200 day index moving average (EMA200).

However, in the long run, the ETH/BTC trading pair shows a growth trend. If we look back at the bear market period of 2018, the lowest point of ETH/BTC reached 0.01, and in the bear market from 2022 to the present, the lowest point of ETH/BTC has also remained around 0.05. This is mainly due to the continuous development and growth of the Ethereum ecosystem, which has accumulated a large amount of on chain value.

Technical indicators

On the daily chart, since August 18th, ETH prices have been below the moving average of the EMA200 index, and the MACD index has just approached the zero axis. In contrast, Bitcoin successfully stood above EMA200 on October 1st, while the MACD index also broke through the zero axis and entered the positive zone.

The performance of ETH is influenced by various complex factors, including macro and micro level factors. Macroscopically, factors such as the Federal Reserve's monetary policy and the SEC's regulatory attitude have an impact on the performance of ETH. At the micro level, the development of the ETH ecosystem, the adoption of Layer2 solutions, the supply of tokens, and market participation also play important roles. Below, we will focus on analyzing the factors that have caused recent changes in ETH performance.

Firstly, there has been a significant decrease in gas consumption, which has led to ETH inflation. In August and September 2023, there was a significant decrease in trading activity on the Ethereum chain. There are multiple reasons for this phenomenon, on the one hand, it is because there are currently no new popular projects, resulting in a decrease in transaction volume; On the other hand, some potential airdrop projects have suffered from hacker attacks and project rugs (i.e. project parties exiting with liquidity), which have also reduced user interaction enthusiasm.

Due to the decrease in on chain activities, ETH's gas costs have also significantly decreased, basically staying below 10gwei. This reduced gas cost means lower costs for on chain transactions, thereby increasing the supply of ETH. In the past 30 days, the supply of ETH has exceeded the consumption, with an inflation rate of 0.275% and an increase of 27000 ETHs.

However, it should be noted that overall, after implementing the ETH2.0 merger, ETH is still in a deflationary state. Since the merger, the deflation rate of ETH has been -0.217%, and the total supply has decreased by 277000 ETHs.

Pledge slowing down, waiting in line for pledged tokens to decrease

Currently, there are 844000 active pledge nodes on the Ethereum network, with a total of approximately 27 million ETHs pledged, resulting in a pledge rate of 25.33%.

Overall, compared to the second quarter of 2023, the number of newly added pledge nodes has significantly decreased.

Currently, the number of nodes waiting to participate in the pledge is 5723, while Ethereum can add up to 2700 new pledge nodes per day. Therefore, without adding new tokens, processing these waiting nodes only takes 2 to 3 days. This is the period where the minimum number of participating pledge nodes has been waiting since the upgrade in Shanghai.

Founders continue to sell ETH in the past two months

The relevant address of founder Vitalik has been continuously transferring Ethereum (ETH) to the exchange. The most recent one was on October 7th, when he transferred 1000 ETHs (approximately $1.64 million) to the Bitstamp exchange again. In the past two months, this address has deposited a total of 4400 ETHs (approximately $7.23 million) into Bitstamp.

In terms of quantity and amount, these transfers are not sufficient to have an impact on the price of ETH. However, from an emotional perspective, this may affect investor confidence.

FTX hackers sell ETH, causing short-term selling pressure

The main event affecting Ethereum (ETH) in the past 7 days has been the sale of ETH and the purchase of Bitcoin (BTC) by FTX exchange hackers starting from October 1st.

In November 2022, shortly after FTX Exchange filed for bankruptcy, hundreds of millions of dollars began to flow out of the exchange balance and enter hacker addresses. Then, on November 21, 2022, hackers dispersed 185000 ETHs (worth $308 million) into 13 addresses and placed them in a dormant state. After 10 months of dormancy, hackers began transferring and selling ETHs from these addresses on September 30th.

From September 30th to October 6th, hackers transferred 75000 ETHs (worth $120 million) from five addresses. Among them, 71000 ETHs were exchanged for BTCs across chains through THORChain, while 2700 ETHs were exchanged for 165 TBTCs and bridged back to the Bitcoin network through ThresholdNetwork. In addition, 1500ETH is transferred through the privacy network RAILGUNProject. This series of transactions also led to THORChain announcing its temporary maintenance status on the afternoon of October 6th.

Currently, hackers still hold 110000 ETHs (worth $176 million) in 8 addresses on the Ethereum network. Out of the original 13 addresses, 5 have been cleared.

Contract data

When paying attention to the changes in Ethereum (ETH) holdings, we can see that the overall trend is showing a downward trend. In January 2023, when the ETH price rose to $1600, the position reached its highest level for the year, with approximately 2.37 million ETHs. In April, when the ETH price rose to around $2000, the position dropped to 1.22 million ETHs, becoming the second highest point of the year. Then, before the price fell on August 18th, the position dropped to 890000 ETHs. Currently, the number of holdings is 730000 ETHs.

Compared to the high position at the beginning of the year, the position decreased by 45%; Compared to the second highest point of the year, it has decreased by 37%; Compared to the position held before August 18th, it decreased by 17%.

In the long run, compared to the previous bear market, due to the development of its ecosystem, the exchange rate between ETH and BTC has overall increased, from 0.01 to over 0.05. However, based on the situation in the past year, ETH is in a relatively weak position compared to BTC, and the exchange rate is showing a downward trend.

Fundamentally, since the merger upgrade, ETH has been in a deflationary state with an inflation rate of -0.217%. However, in the past two months, there has been a significant decrease in on chain trading activity and a significant decrease in Gas revenue, leading to ETH entering an inflationary state, with an annualized inflation rate of 0.275% in the past 30 days.

In terms of pledge data, ETH's pledge rate has been continuously increasing since the upgrade in Shanghai, currently at 25.33%. However, the newly added pledge data in recent periods has been significantly lower than the data in the second quarter of this year, and the number of nodes waiting for pledge has been relatively small, setting the lowest level since the upgrade in Shanghai.

In terms of selling, the founder of ETH continues to sell ETH, although the quantity is not large, their confidence in holding tokens has been negatively affected. In addition, the hacking incident on the FTX exchange resulted in ETH being sold to purchase BTC, which also brought significant short-term selling pressure to ETH.

Contract dataETHETH45%37%81817%

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