BC.Game

Ether (ETH) Corrects More Than 20% as Crypto Market Plummets

UTC by Bhushan Akolkar · 2 min read
Ether (ETH) Corrects More Than 20% as Crypto Market Plummets
Photo: Depositphotos

After a strong rally in July and part of August, the risk sentiment in crypto has once again turned negative. Expectations of upcoming Fed rate hikes have been putting pressure on the crypto market as a whole.

Over the last week, the broader cryptocurrency market has been under steep correction. The world’s second-largest crypto Ether (ETH) has once again come under selling pressure correcting more than 20% on the weekly chart.

As of press time, Ether (ETH) is trading at $1597 with its market cap slipping under $200 billion. Since the beginning of July 2022, the ETH price was on a strong rally gaining almost 100% from its low of $1,000, in just 45 days.

The ETH price rally came on the backdrop of a strong optimism surrounding the upcoming Merge upgrade. The Merge upgrade will ensure the transition of the Ethereum blockchain to a Proof-of-Stake (PoS) network. The Ethereum PoS will drastically improve the Ethereum network scalability, performance efficiency, reduce gas costs, and much more.

Two weeks back, Ethereum developers successfully conducted the Merge upgrade on the Goerli testnet. This was the final dress rehearsal before the Merge upgrade on the Ethereum mainnet.

Risk Sentiment Turns Negative

Although there isn’t quite a specific trigger for the recent sell-off, the global market sentiment remains quite negative for now. Although the U.S. has shown signs of cooling inflation, it is still well above 8.5% and the data in the subsequent months will determine the actions of the Federal Reserve.

The Fed officials have indicated that there will be a slowdown in the interest rate hikes. However,  many market analysts are expecting a 75 basis points hike next month in September. As a result, investor sentiment is likely to turn risk averse going ahead. Singapore-based QCP Capital noted that the Fed action has led to “equities stalling and trading lower, yields drifting higher and USD rallying across the board”.

They also noted that “significant profit taking led to liquidations of levered long positions built up over a strong month-long rally”.

While the ETH price has been heading downwards, the ETH staking activity continues to remain strong ahead of the Merge. Citing data from OKLink, crypto journalist Colin Wu writes:

“The number of ETH 2.0 deposit contract addresses has reached 13,343,768, and the stake rate has exceeded 11.17%. About 36,000 ETHs have been added every week, and 153,000 new ETHs have been staked since August”.

On the other hand, the Ethereum network activity hasn’t picked up quite well amid the recent rally. Also, the ETH gas fee has been continuously trending lower amid the slowdown in the DeFi market. This shows that the on-chain activity is still lacking the price action.

Altcoin News, Cryptocurrency news, Ethereum News, News
Bhushan Akolkar

Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.

Related Articles