Ethereum (ETH) is facing mounting challenges as its price tumbles below a crucial technical indicator. The cryptocurrency’s long-term chart has sent a clear bearish signal, raising concerns about the future of the second-largest digital asset.
A key indicator of market sentiment, ETH’s price recently dipped below the 200-day moving average (200-DMA). Historically, this bearish move has often preceded significant market corrections, adding to the prevailing sense of uncertainty.
Despite the gloomy outlook, a silver lining appears in the form of spot Ether ETFs, which attracted a net inflow of $26.7 million on August 1. This influx of institutional capital could potentially provide some support for the struggling cryptocurrency.
However, the broader Ethereum ecosystem is facing headwinds. Network fees, a crucial revenue stream, have plummeted since March. After averaging over $10 million per day in the first quarter of 2024, daily fees have dropped to around $3.5 million in Q2 and below $3 million in July. This decline correlates with a decrease in total value locked (TVL) in Ethereum-based DeFi protocols, indicating a slowdown in decentralized finance activity.
Also Read: Ethereum Crashes 6% Amidst Recession Fears, Schiff Predicts Further Drop To $2,000
While weekly active users have remained relatively stable, the sharp drop in fees is a cause for concern. The question now is whether Ethereum can hold its ground at the $2,700 support level. Data suggests that a significant number of addresses have accumulated ETH around the $3,000 mark, offering some potential resistance to further price declines.
However, analysts warn that this support level may not hold if the market momentum continues to weaken. With the cryptocurrency market characterized by its volatility, ETH’s price trajectory remains uncertain. Investors are closely watching for signs of a potential rebound or a deeper correction.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
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