Ethereum Breaks Support Might Test $1500 Levels. ETH Price Drops to Yearly Low. When compared to Bitcoin, the world’s second-largest cryptocurrency by market cap has plunged to a low not seen since November 2021. As per analysis, the ETH price may fall further.
The performance of Ether (ETH) over the last three months has been less than satisfactory for holders, and the 50% fall since April 3 has prompted the altcoin to challenge the $1,800 support level for the first time since July 2021.
The next big support is $1,700. A breach below $1,700 on the downside could trigger another rapid drop. In the aforementioned scenario, the price might fall as low as $1,650. Any further losses may necessitate a transfer to $1,500.
Apart from Ethereum Crash, altcoins from other blockchain networks supporting the decentralised finance industry have experienced deeper corrections in the recent 24 hours. Solana (SOL) is down 12% and Avalanche (AVAX) is down 18% in the last 24 hours.
ETH gas fee dropped to $2.54 earlier this week and headed even lower. On-chain data provider Santiment reported
📊 #Ethereum continues to show extreme low fee levels, indicating very minimal activity and hints of stagnancy and fear. This #hibernation behavior also applies to $ETH's often paired #stablecoin, $DAI. Read our insight on #DAI's velocity as a top signal. https://t.co/sb6J4urmex pic.twitter.com/kdXe7wYOD1— Santiment (@santimentfeed) May 26, 2022
Reason Behind Ethereum Price Fall
Honestly speaking there is no exact reason behind ETH Crash. But here are some of the possible reasons behind ETH price crash.
Since the inception of the Layer 1 blockchain solution which is quite fast as compared to a native on-chain transaction. Many Layer 1 platforms are gaining more users due to faster transaction time and low gas fees.
Platforms like Polygon (MATIC) have proven to provide faster transaction speed and smart contract creation and flawless integration among many DeFi platforms.
Stable Coin Collapse
After the Terra ecosystem collapsed, investors lost billions in LUNA & UST cryptocurrency. The collapse of Terra made many institutional investors reconsider their investment strategy. Many asset-backed stable coins are like USDT lost market cap due to this.
Due to the crypto market crash, rug pull projects, insane volatility & interest rates increase, many big-time investors are reallocating their crypto investment to real estate, stocks & bonds. Which in terms of creating downward price pressure.
Cash Crunch Problem
If you think that retail investors will save the market then here is the problem. First of all, due to the global stock market fall, many retail users who have entered the market are sitting with a huge loss.
Inflation is at an all-time high which reduces the purchasing power of their money. To make matter worse, every day thousand of crypto scams and rug pulls are coming to market which just pulls the money out of retail investors’ pockets.
To provide support to the market at a lower level, one should have free cash to make the purchase and at the same time if investors do have no extra cash then providing that support will be hard and in this case, only time-wise consolidation may provide some kind of support to the market. Ethereum Breaking major Support Might Put ERC20 Ecosystem into a Crypto winter.
Ethereum dominance has reached its lowest point since March, while Bitcoin dominance has increased by 10% since May. Binance Coin’s dominance increased by 20% in May, adding fuel to the argument over Ethereum’s status as the most significant competitor to Bitcoin. Binance Coin is also up 15% against Bitcoin in the same span.
For news related to cryptocurrency, NFT, stable coins, and other crypto-related topics, Please follow our crypto news section.