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.
Guage will take everyone today to analyze the reasons why ETH is so weak.
Ethereum supply surge disrupts the "ultrasonic" theory
Throughout 2022, the Ethereum network underwent a significant upgrade, changing its coin issuance mechanism.
This reform has led to a significant decrease in the number of new Ethernet tokens issued to ensure network security, and introduced a destruction mechanism to further reduce ETH supply.
Ethereum enthusiasts affectionately refer to this new supply plan asUltrasonic currency.
This is because 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 are not aware of the inherent unpredictability of this monetary policy.
In September 2023, due to a decrease in network activity and a decrease in dynamic basic costs, the token issuance equation underwent a reversal.
According to Ultrason.money's data, due to the decrease in destruction mechanism activity, the ETH supply has surged by 30064 ETH in the past 30 days.
It should be noted that the Ethereum mechanism is operating as designed, and there are no unexpected factors that may reduce transaction demand.
Part of the problem lies in the high fees caused by persistent network congestion, and the second layer expansion solution can only partially solve this problem.
The sale of V God and the Ethereum Foundation resulted in dismal results
Arkham's analysis of data shows that in the past five weeks, an address related to V God Buterin has sent 3999ETH to the exchange, with a total value of approximately $6.4 million.
Given the scale of the sale, this significant move has sparked speculation among the community about its reasons.
The latest transaction on October 7th suggests that these ETHs may have been converted into fiat currency on Bitstamp.
It is worth noting that the address
0xD04daa65144b97F147fbc9a9B45E741dF0A28fd7 still holds 36000ETH, equivalent to $57.2 million.
The Ethereum Foundation recently made a sale, using Uniswap to convert 1700ETH into stable currency worth $2.74 million on October 9th.
However, in this case, analysts point out that the fund's actions are consistent with its regular operating expenses, subsidies, and incentive requirements.
The demand for ETH futures and ETFs is decreasing
Although many theories can be proposed to explain the on chain activities of FTX hackers, there seems to be no reason to convert ETH into BitWrappedBitcoin, except for predicting higher returns when measured in fiat currency.
Despite the recent surge in Ethereum supply, its price trend relative to Bitcoin remains unfavorable as of November 2022.
In the past 11 months, Ethernet/Bitcoin has reached 25.7%, causing the ETH/BTC ratio to fall below the support level of 0.06.
Therefore, the negative sentiment surrounding the price of Ethereum can be attributed to multiple factors, including the lawsuit filed by the US Securities and Exchange Commission against Coin and Coinbase in June 2023.
Recently, on October 2nd, the Ethereum Futures ETF was launched on the Chicago Mercantile Exchange (CME) and Chicago Board of Options Exchange (CBOE), with a total trading assets of less than $10 million in the first week of trading.
In short, the recent news surrounding Ethereum has mostly been negative, which has led to its recent poor performance.
The factors contributing to this trend include higher regulatory risks in tokens and exchanges, recovery of net coin issuance, sales of V-God and Ethereum foundations, and weaker than expected demand for futures contract based ETFs.
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