Due to the increased supply on exchanges, Ethereum's price may drop by 10%. Analysts point out that the increase in Ethereum balances on trading platforms indicates a potential sell-off, which adds to the bearish pressure on the cryptocurrency.
Ethereum (ETH) is under significant downward pressure due to the continued increase in its supply on exchanges. Recent data shows that the amount of Ethereum held by various exchanges has reached its highest level in four weeks, suggesting that investors may be preparing to sell.
An increase in supply is typically seen as a bearish signal as it indicates that there are more tokens available for trading, which may lead to lower prices.
The overall market sentiment for Ethereum is influenced by several key factors. One of the main concerns is that the total locked value (TVL) of decentralized finance (DeFi) protocols based on Ethereum is declining.
TVL is a key metric that represents the total amount of assets staked on DeFi platforms. A decline in TVL indicates that users are withdrawing assets, possibly due to waning confidence in the Ethereum network or in search of better returns elsewhere.
In addition, Ethereum's high transaction fees also pose a significant barrier for users. The exorbitant fees, often referred to as 'gas fees', make the cost of transactions on the Ethereum network very high.
This has prompted users and developers to move to alternative blockchain networks that offer lower fees and faster transaction times.
As Ethereum faces these challenges, its price has been volatile and struggling to maintain its upward momentum. The cryptocurrency is encountering resistance at key levels, failing to break through the $2675 and $2700 thresholds.
If Ethereum hopes to initiate a new rebound, these resistance points are crucial. On the downside, the main support levels are around $2600 and $2580. If the price falls below these support levels, it could trigger a deeper correction, potentially pushing the price down to $2500.
As Ethereum navigates this uncertain period, investors need to stay informed about market trends and key indicators. The increased supply on exchanges and high transaction fees are significant factors contributing to the current bearish outlook.
To mitigate risk, investors should consider diversifying their portfolios and closely monitoring support and resistance levels. While the short-term outlook may be challenging, as long as the network addresses its scalability and fee issues, Ethereum's long-term potential remains strong.
Adapting to these changes and maintaining a cautious approach is crucial for navigating the ever-evolving cryptocurrency landscape.
This article is for reference only and does not constitute investment advice.
