Why Ethereum has fallen sharply recently (the reason why Ethereum has soared recently in 2021)
Why Ethereum has fallen sharply recently Editor’s note: This article is from the Caiyun blockchain (ID: cybtc_com), and the Odaily Planet Daily is authorized to reprint it
Why has Ethereum plummeted recently
Ethereum is the world’s largest Cryptocurrency, which has increased by nearly 70% in the past year, from about $300 in January 2018 to about $1000 at the end of June this year. After the price of Ethereum skyrocketed to its high point at the end of 2017, it has been continuously declining and even experiencing a significant correction At present, ETH has been in a sideways trend for four consecutive months, but due to its significant price fluctuations, it may experience more severe selling situations
In the last quarter of 2019, the price trend of Ethereum has been very flat. Since early December last year, ETH has experienced a very significant decline and adjustment, and it still maintains a strong upward trend to this day Although some people believe that Ethereum is a means of storing value and has some appeal, in the coming weeks, this view seems to be being accepted or fully supported by the market – but there are also some people who are cautious about the recent sharp drop in ETH. According to an article published by Barry Silbert, CEO of Gray Investment, an encryption asset management company, Ethereum 2.0 may be significantly updated in early 2020, but this upgrade will not be implemented in 2021
Therefore, a lot of things happen on the Ethereum network every day, especially when users use the platform to purchase tokens, they will receive rewards similar to Bitcoin, which leads traders to start selling their tokens to pay gas fees; At the same time, when users buy and sell tokens through this application, new sources of income will also be generated
Ethereum’s indicators on the chain have also undergone tremendous changes. According to CoinMetrics, the average handling fee of Ethereum reached the highest level in history last Saturday, close to 150Gwei. Compared with the previous week, the daily transfer times of Ethereum decreased by more than 30%
The number of Ethereum active addresses soared. At the time of writing this report, a total of 23000 independent wallets held 32700 ETHs (accounting for 6% of the total), while the number of active addresses during the same period was only 94000. Uniswap alone has approximately 20000 ETH holdings
Ethereum’s weekly trading activities
Although ETH has continued to rise in recent months, its price has not changed at all. In August, with the temporary downward trend of ETH prices and the subsequent bull market, the trading volume on Ethereum’s network decreased. However, the daily turnover of Ethereum Network is still more than 40% lower than the historical peak in July
Reasons for Ethereum’s recent boom in 2021
Since the beginning of 2021, the price of Cryptocurrency has risen by nearly 70%, while Bitcoin has soared from about $4000 to more than $6000 in a short time, with an increase of more than 100%
With the increasing demand of investors for the Ethereum 2.0 pledge plan, the value of Ethereum has begun to rise. As of the time of publication, the figure was 438 million US dollars According to data provided by CoinMetrics, the price of Ethereum decreased by 15% and 20% respectively between January and the end of March this year. Since 2020, the ETH/USD chart source: Trading View. com ETH2.0 pledge situation is different from the growth in 2019. Due to the surge in ETH2.0 pledge quantity, daily transaction volume on its network has also significantly decreased. Therefore, when people use Ethereum, they may have to invest their funds in a new pledge pool. This makes pledge activities more active as it can help users obtain pledge proceeds. Total locked assets (TVL) of DeFi application on Ethereum Source: Coinmetrics. io. Firstly, the total lockdown volume of the DeFi agreement has reached approximately $1 billion; Secondly, before reaching a historic high of nearly $200 million at the end of 2020, the total value locked in was still at a high level – ETH supply increased by approximately 60% at that time. The total circulation of ETH in the first quarter of 2020 was 15.94 billion; Subsequently, the total circulation of ETHs for the entire year of 2020 reached 5.16 billion, but only slightly higher than the level at the end of 2020. (Note: The DeFi agreement issued a total of 9.15 billion tokens.) Although the growth rate of DeFi applications is much faster than the ETH2.0 pledge rate, most of these protocols still run on the main network and have lower network costs. This means that without enough ETHs being pledged, it will be difficult for them to become a decentralized market again
The second risk is transaction costs, which may lead to fluctuations in ETH prices, because traders usually sell Ethereum on Ethereum as a way to offset losses. In addition, as the number of ETH holders decreases, they hope to use their positions to earn interest and generate greater investment returns. One of the catalysts for the third bull market is the stage 0 after the launch of Ethereum 2.0.
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