Ether’s price is facing short-term pressure due to reduced demand for its decentralized applications (DApps), a drop in DApp deposits, and a lack of leverage buying demand from professional traders. The worsening crypto regulatory environment and high gas fees on the Ethereum network are also negatively impacting Ether’s price. Three indicators signal that the $1,900 resistance will be hard to break in the short term, favoring the odds of a price correction.
Key points:
– The SEC has given a formal response in court in relation to Coinbase’s petition for clear crypto regulation, stating that any rulemaking may take years and that enforcement actions will continue in the meantime.
– The Markets in Crypto-Assets (MiCA) regulation was approved by the Economic and Financial Affairs Council of the European Union, which will come into effect by mid-2024. Some argue that MiCA facilitates business growth in the region, while others focus on the privacy risks for personal users’ data and the risks imposed on non-custodial solutions.
– The drop in DApp deposits is concerning, with total deposits on the Ethereum network in Ether terms plunging to their lowest levels since August 2020. Ethereum’s market share by volume on DEXs peaked at 75% in the week ending March 5 but steadily declined to its lowest level ever, 39.6%, in the week ending May 14.
– Ether professional traders have avoided leverage longs (bullish bets) since early April, and the current 1% ETH futures premium is on the edge of becoming negative, known as backwardation.
