Ether ( ETH ) price is down on Dec. 16 and the pre-FOMC rally to $1,350 was obliterated after Federal Reserve chair Jerome Powell issued hawkish statements following a 0. 50% hike in interest rates.
Ether price was dealt another blow when Silvergate Capital Corporation decided to voluntarily liquidate Silvergate Bank. Silvergate Bank was one of the major crypto-friendly banks before a wave of companies dropped their services due to liquidity concerns. The Ether sell-off also ignited a wave of Ethereum long liquidations, totaling $70 million from March 1-8.
The rush of long Ether liquidations comes when Ethereum volume, which could offset liquidations, is down 90% since March 2020. While some analysts believe Ethereum still possesses multiple bullish catalysts that warrant investing in the asset, on-chain data paints a grim picture of its short-term price prospects. Here are three reasons why Ether price is down today.
The total value locked metric is a common way to examine the health and sentiment of a proof of stake ( PoS ) blockchain like Ethereum. Ether price fell as the TVL across the Ethereum ecosystem fell from a monthly high on March 2 of $29. 7 billion to a monthly low of $28.
1 billion. The monthly low was accompanied by a 1. 75% 24-hour decrease in TVL on March 9.
The Ether price drop comes as centralized exchange netflow shows investors sending more funds to a CEX than withdrawing to a decentralized exchange . On March 7, 21. 7 million more Ether was sent to centralized exchanges than withdrawn.
Typically, investors tend to move funds to a CEX to sell into deep liquidity. On March 7, Federal Reserve Chairman Powell addressed the U. S.
Senate Committee on Banking, Housing and Urban Affairs in the Semiannual Monetary Policy Report to Congress. In prepared remarks , Powell hinted at higher interest rate increases to control inflation, Powell’s remarks reverberated throughout the stock market, which closely correlates to Ether’s price. After anticipating only a 0.
25% basis point interest rate increase on March 1, according to CME’s FedWatch tool, the market now expected a 0. 5% basis point interest rate increase. Despite briefly overtaking Bitcoin ( BTC ) for more active users on Jan.
8, the Ethereum network continues to see less activity than BTC. In addition to Bitcoin maintaining more active users than Ethereum, a top Ethereum-based NFT company, Yuga Labs launched a BTC blockchain-based NFT auction on March 7 which raised $16. 4 million.
Initially, the Shanghai hard fork , was slated for March 14. On March 2, Ethereum developers announced a delay in the hard fork until April. Despite on-chain data suggesting the Shanghai hard fork will not bring massive sell pressure, Ether price will likely remain volatile.
While investors’ appetite for high-risk assets and their interest in DeFi could continue to diminish with more the rollout of higher interest rates in the U. S. , factors like clarity on regulators' stance on cryptocurrencies and the eventual increase in Ethereum network-based protocols may prove to be a long-term catalyst for price growth.
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