Ether (ETH) price experienced a decline on May 17, reaching a 7-day low of $1,788. This price drop occurred soon after Chinese prosecutors pledged to clamp down on the NFT market. Moreover, lawmakers in the United Kingdom argued that crypto assets should be regulated similarly to gambling, given their high-risk nature. This, along with the wavering Bitcoin (BTC) price, losing its key $27,000 support level on May 17, has also contributed to Ether’s downward trend. Here are three critical factors affecting Ether price today.
First, an Ether sell-off triggered a wave of Ethereum leveraged liquidations. On May 17, 26,158 traders were liquidated, amounting to $56 million. This surge in Ether liquidations occurs as Ethereum’s trading volume is down from a March 11 peak of $24.8 billion to a mere $1.9 billion. Furthermore, other protocols such as Bitcoin’s BRC-20 standard and Dogecoin’s DRC-20 standard are gaining momentum. Consequently, some analysts predict Ethereum will struggle to reach and sustain a value above $1,900 in the short term.
Second, regulatory focus is shifting towards Ether. The ongoing debate regarding Ether’s classification as a security token in the United States has led to investor confidence wavering. Though the U.S. Commodity Futures Trading Commission chair believes Ether is a commodity rather than a security, there has been no clarification from the SEC. If Ethereum were to be deemed a security in the United States, centralized exchanges might be forced to delist Ether for U.S. customers. Additionally, this security classification could negatively impact altcoins, DApps, and decentralized exchanges built on Ethereum.
Lastly, Ether’s price drop has coincided with increased deposits on centralized exchanges. On May 17, Ether deposits on centralized exchanges rose by 119% within 24 hours. Higher net deposits on these exchanges could lead to increased selling pressure, and combined with diminished trading volume, Ether’s price may drop further.
Investor expectations for 2023 remain uncertain. While appetite for high-risk assets and interest in DeFi may continue to decrease due to the lack of clarity on regulatory stance, the emergence of new blockchains and reduction in volume could play a role. The eventual increase in Ethereum network-based protocols could serve as a long-term driving force for price growth.
Source: Cointelegraph
