Ethereum users are leaving DeFi for NFTs and gaming, says expert
Ethereum's weekly losses currently stand at -8%
- In recent weeks ETH has continued to showcase an increasing amount of correlation with BTC.
- Experts believe that once the Ethereum network is finally able to make its transition to a PoS framework, its value will start to soar.
- US inflation levels are currently at their highest in nearly three decades, resulting in price drops across a number of different industries including crypto.
While many were expecting Ethereum, the world's second largest cryptocurrency by total market capitalization, to scale up to its previous all time high value on the heels of its most recent London Upgrade, the altcoin's performance has been quite dismal, to say the least. Over the past month, the digital asset is down nearly 25%, currently trading at AU $2,620.
In order to better gauge Ethereum's ongoing situation, Finder spoke with Ross Middleton, CFO at DeversiFi, a Layer 2 decentralised exchange built using StarkWare technology. In his view, ETH is currently exhibiting a sizable correlation with Bitcoin as a result of which the latter seems to be guiding the altcoin's daily price movements. He further added:
"Most people expected a short term decoupling ahead of EIP-1559, which hasn't seemed to have happened yet. As yields in decentralised finance (DeFi) have collapsed, trader interest has moved to NFTs and gaming. Eyes should turn back to Ethereum after EIP-1559 has been deployed and the price of Bitcoin starts to recover again."
Providing his thoughts on the subject, Antoni Trenchev, managing partner at Nexo, an digital asset institution with over US $15 billion in AUM, told Finder that Ethereum's financial woes could end soon, especially as the asset gets ready to make its much awaited switch from a proof-of-work to proof-of-stake framework.
He further highlighted that the successful launch of the London Hardfork on three separate testnets looks extremely promising, however, he is still cautious and wants the update to go live fully so as to see its effects in real time. "It's not far from the mind to think the new scalability, and faster and cheaper transactions will propel Ethereum investors towards increased use of the network and its native coin, it's just a matter of patiently waiting for the upgrade to come," Trenchev closed out by saying.
As pointed out earlier, Ethereum was one of the currencies with the hottest bullish outlook for the start of Q3 2021, however, with US inflation data just starting to hit mainstream news cycles across the globe, it seems as though investor panic is setting in across different markets including commodities, stocks, crypto, etc.
To be a bit more specific, late last month, the U.S. Consumer Price Index scaled up to a relative high of 0.9%, hitting a 5.4% year-over-year value — a figure that has not been witnessed in nearly three decades. All of these developments come in the wake of the Federal Reserve's decision to print trillions of dollars last year as well as the agency's decision to maintain interest rates at near zero levels so as to help boost consumer activities.
Disclosure: The author owns a range of cryptocurrencies at the time of writing