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 Ethereum (Eth): Constantly Increasing Sell Pressure?

Ethereum (Eth): Constantly Increasing Sell Pressure?

The cryptocurrency market is a volatile market, it is well known. Ethereum (ETH) occupies the precious place of the second cryptocurrency in terms of valuation, just behind Bitcoin (BTC).

Ethereum (Eth)

Its value fluctuated between 1,580$ in March 2021 and 2,293$ in early March 2022, notably with an impressive peak of 4,300$ in early November 2021. In the first week of March alone, it continued to vary within a range of 400$, alternating between 2,800$ and 2,400$ constantly. On the scale of a single day, cryptocurrency investors were thus jostled by nearly 200$ of volatility.

More generally, the news revolving around the famous cryptocurrency Ethereum (ETH) lately focuses on the pressure felt by investors on sales, a pressure that is constantly increasing, and unbalancing the balance of purchases.

News complex to understand in its entirety, here is 3 points according to which it will quickly appear much more obvious to you to understand:

  • Ethereum (ETH), consecutive declines since February
  • Ethereum and Bitcoin (ETH/BTC), what is the link?
  • An attractiveness with strong competition from other cryptocurrencies: example with the Polkadot (DOT)

Ethereum (ETH), Consecutive Declines Since February

This pressure felt by all new generation investors does not date from 2022, quite the contrary. Since 2021, the world of cryptocurrencies has been more volatile than ever. Ethereum (ETH) in particular has suffered numerous consecutive declines, just during the month of November 2021.

Going back to the year 2022, these back-to-back declines continued to show. In particular since February:

  • Early February: +33% for the price of ether, with a value reaching 2,837$ on February 9, 2022.
  • February 21, 2022: sharp fall to 2,273$.
  • March 1, 2022: rise to 2,670$, arousing the enthusiasm and hope of crypto investors.
  • March 7, 2022: once again down to 2,200$.

Currently, the percentage of ETH purchased less than 1 month ago is around 5% of ETH in circulation, significantly lower than the 2018-2019 bear market.

For comparison, if we take the bull run period of early 2021, this range of ethers purchased less than 1 month ago reached more than 20% of the ethers in circulation. Today, the reality is quite different, and investors are becoming increasingly rare.

A Difficult Year 2022… For now?

Those who bought ETH between July 2021 and March 2022 are reselling at a loss. Amid this flood of consecutive declines, a small beacon of hope nevertheless seems to be emerging.

During the last week of February and first week of March, it looks like traders pulled close to 327,000 Ether from the market, showing that the pressure around Ether selling may finally ease or even come to a halt.

Thus, the price of ether and any possible revaluation are very unstable, this data being openly linked to the own price of Bitcoin (BTC).

Ethereum And Bitcoin (ETH/BTC), What Link?

Ethereum (ETH) and Bitcoin (BTC) are respectively the two main cryptocurrencies traded on the market. The correlation coefficient between the two cryptocurrencies is impressive: + 0.97.

At this level of correlation, ether falls as soon as bitcoin falls, and regains value as soon as bitcoin rises as well. And so on. As a reminder, a correlation coefficient of +1 means that two cryptocurrencies are totally correlated, therefore in symbiosis. ETH and BTC are therefore not far from symbiosis.

Strongly Competed By Other Cryptocurrencies: Example With The Polkadot (DOT)

The main criticism leveled against Ethereum (ETH) is related to the exorbitant fees for its transactions, with ether being decried by some users as an unviable solution.

Other players take advantage of this and create their nest, which is the case of the Polkadot (DOT), carried by Gavin Wood who is none other than the co-founder of the Ethereum blockchain. Polkadot describes itself as a metablockchain, in that it seeks to build bridges between all the blockchains that already exist.

It quickly aroused the interest of crypto investors, and made a name for itself in the top 10 cryptocurrencies by capitalization (whose current capitalization reaches nearly $5 billion).

At present, Ethereum maintains its strong position. And this, thanks to its reputation as well as the stability of its blockchain to develop a project. But in the near future, this question of which blockchain to launch your project development on will no longer arise. Because blockchains all have the ambition to become compatible with each other.

Interoperability would thus be strongly impacted until it becomes transparent, ether then being only one choice among others. Interoperability indeed appears to be the future of the world of cryptocurrencies and blockchains. According to Gavin Wood himself, beyond a simple question of competition, Polkadot and Ethereum would thus be brought to co-exist.