The cryptocurrency market is perpetually in flux, and recently, the ethereum (ETH) market exhibits dynamism that piques the interest of experts and enthusiasts alike.
ETH, following a sharp drop to the $1,530 support level on September 11, rebounded by 6%, a promising sign after enduring losses of 16% throughout the past month. This resilience ignites speculation among investors about ETH’s potential to climb back to $1,850. However, this presents a multifaceted conundrum. While macroeconomic factors, such as accelerating inflation in the United States, may diminish investor pessimism and boost scarce assets like cryptocurrencies, high network fees and regulatory uncertainties emit waves of unease.
The possible indictment of the popular crypto exchange Binance by the U.S. Department of Justice, and the woes that Binance.US experiences with the U.S. Securities and Exchange Commission (SEC), stir up perturbation in the cryptocurrency ecosystem. To add to the concerns, the Ethereum network faces a steady decline in smart contract activity, central to its function, and wrestles with persistently hefty average fees above the $3 mark.
A decline in active addresses over the past month among top Ethereum dApps by 26% could be perceived as a setback. Despite this, liquid staking project, Lido, has seen a surge of 7% in its total value locked (TVL) in ETH terms over the same period. The project’s success is met with skepticism, stirring up apprehensions about centralization due to Lido’s substantial contribution of 72% to all staked ETH.
Simultaneously, vibrations of enthusiasm fade among Ether derivatives traders. ETH monthly futures, which typically trade at a 5 to 10% annualized premium, slumped to a 2.2% low, hinting at a dwindling demand for leveraged long positions.
As the landscape is fraught with regulatory obstacles and a potentially stifling macroeconomic environment, enthusiasts and investors alike must sail cautiously. While ETH offers enticing prospects such as the possibility of a spot ETH exchange-traded fund (ETF) and macroeconomic elements influenced by inflationary pressure, the eroding use of dApps and looming regulatory uncertainties sow seeds of doubt. The race for ETH to touch the $1,850 mark in the short to medium term may be an arduous one. Crypto enthusiasts must remain nimble and astute, navigating a realm that veers on an uncharted course with every passing second.
Source: Cointelegraph
