Ethereum dips 13% overnight as blockchain experiences technical issues
A slight reorganisation on Ethereum's Beacon Chain has caused the asset to lose approximately 13% of its value since 25 May.
- Earlier this week, ETH dipped below its all-important AUD$2,500 (US$1,800) psychological threshold for the first time since July 2021.
- Solana's technical indicators suggest that the altcoin may face a 45% price dip in the near term.
- Ethereum's total market cap currently stands at AUD$295 billion (US$210 billion). The asset accounts for 16.82% of the digital asset market's cumulative valuation.
Since 26 May, Ethereum has seen its value topple from AUD$2,750 to a relative low of AUD$2,380 before showcasing a positive price correction. ETH is currently trading at AUD$2,450 while exhibiting monthly losses in excess of -37%.
The last 90 days have seen ETH on a path of steady monetary descent. Since the first week of April, Ethereum's price has corrected by over 50%, with the altcoin slipping below its all-important AUD$2,500 (US$1,800) resistance for the first time in nearly 10 months.
The ongoing volatility affecting the stock and crypto markets has seen investors seeking shelter in the US dollar and other fiat assets. On 13 May, the US Dollar Index (DXY) scaled up to its highest levels in approximately 2 decades. The DXY assesses the performance of the US dollar against major foreign currencies such as the British pound, the euro and the Japanese yen.
Even the United States' 5-year Treasury Yield ratio rose to its highest level since August 2018, climbing to 3.10% earlier this month. This suggests that investors are starting to demand larger returns to compensate for surging inflation levels.
Ethereum's current price slump may have been compounded by a recent chain reorganisation (of approximately 7 blocks) on 25 May. The move took place as a result of a legitimate transaction sequence being knocked off the chain due to a competing block getting more support from network participants. The development is not uncommon and was duly corrected after it was identified.
The 10% price drop that ensued caused leverage traders (long-position holders) to lose out on US$160 million, which was liquidated across various derivatives exchanges.
Solana crash incoming?
The current market has been rough on altcoins. Solana dropped by 13% on 26 May, resulting in SOL scaling down to AUD$58.32. The SOL/USD pair seems to be forming a technical pattern referred to as the "bear pennant", which usually arises before an asset moves downward in price. Experts believe that the coming weeks could see Solana slip to AUD$32.25.
Disclosure: The author owns a range of cryptocurrencies at the time of writing.