Ethereum prices decreased by 8.2% between October 2nd and October 9th
Ethereum prices decreased by 8.2% between October 2nd and October 9th.
ETH's recent performance is indeed not ideal.
Ethereum supply surge disrupts the "ultrasonic" theory
Throughout 2022, the Ethereum network underwent a series of major upgrades, with one of the most notable changes being the change in its distribution mechanism.
This reform has led to a significant reduction in the number of new tokens issued by Ethereum, aimed at ensuring network security. At the same time, the new mechanism introduces a token destruction mechanism to further reduce the total supply of ETH.
Fans of the Ethereum community affectionately refer to this new supply plan as' ultrasonic currency '. This term comes from the fact that for most of 2023, the number of tokens destroyed exceeded the number issued, resulting in a net decrease in the total supply of ETH.
However, many people may not be aware of the inherent unpredictability in this monetary policy. By September 2023, due to a decrease in online activity and a decrease in dynamic basic costs, the token issuance equation had reversed.
According to Ultrason.money's data, the supply of ETH has increased by 30064 ETH in the past 30 days, due to a decrease in the activity of the destruction mechanism.
It should be noted that Ethereum's mechanism is operating according to design, and there are no unexpected factors that have led to a decrease in transaction demand. Part of the problem lies in persistent network congestion, leading to high transaction costs, and the second layer expansion solution can only alleviate this problem to some extent.
The sale of V God and the Ethereum Foundation resulted in dismal results
According to Arkham's analysis, in the past five weeks, an address related to Ethereum founder Vitalik Buterin has sent 3999ETH to the exchange, with a total value of approximately $6.4 million.
This large-scale transfer has attracted widespread attention from the community, and people are speculating about the reasons behind it.
The latest trading data as of October 7th suggests that these ETHs may have been converted into legal tender on exchanges such as Bitstamp.
It should be noted that the account associated with this address (address:
0xD04daa65144b97F147fbc9a9B45E741dF0A28fd7) still holds 36000ETH, equivalent to $57.2 million.
In addition, the Ethereum Foundation recently conducted an ETH sale, using Uniswap to convert 1700ETH into stable currency worth $2.74 million on October 9th. However, analysts pointed out that the transaction of the foundation seems to have been carried out for its normal operating expenses, subsidies, and incentive plans.
The demand for ETH futures and ETFs is decreasing
Although multiple theories can be proposed to explain the on chain activities of FTX hackers, there seems to be no clear reason to switch from ETH to Bitcoin WrappedBitcoin, unless it is predicted that there will be higher returns when measured in fiat currency.
Recently, the supply of Ethereum has significantly increased, but as of November 2022, the price trend of Ethereum relative to Bitcoin is still not optimistic. In the past 11 months, Ethereum's performance against Bitcoin has fallen by 25.7%, resulting in the ETH/BTC ratio falling below the support level of 0.06.
Therefore, the negative sentiment surrounding the price of Ethereum may stem from multiple factors. This includesThe lawsuit filed by the US Securities and Exchange Commission against Coinbase and Coinbase in June 2023 has raised market concerns.
Recently,Ethereum Futures ETF launched on the Chicago Mercantile Exchange (CME) and Chicago Board of Options Exchange (CBOE)However, in the first week of trading, the total assets did not reach the expected level, only slightly above $10 million.
Overall, most of the recent news surrounding Ethereum has been negative, which has led to its poor recent performance. The reasons for this trend include increased regulatory risks to tokens and exchanges, an increase in Ethereum's net issuance of coins, the sales behavior of Ethereum's co founder V Shen, and lower than expected demand for futures contract ETFs.
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