Ethereum price climbs even as DeFi continues to shrink
The year-to-date outflow on the Ethereum network has reached AUD$662 million (US$459 million) as of 17 June 2022.
- Ethereum's share of the crypto market capitalisation has slipped to 14.8%, its lowest levels in over half a year.
- ETH's annual losses have now risen to -32%.
- Popular European cryptocurrency exchange Bitpanda announced that it was letting go of more than 270 of its employees last week.
Ethereum seems to have found some respite from its recent price woes, having risen from a relative low of AUD$1,300 to as much as AUD$1,820. The altcoin's weekly gains stand at approximately 9% while trading at AUD$1,760.
The price volatility seems to stem from the growing amount of capital that has continued to exit the Ethereum network in recent months. In fact, since December 2021, ETH's value has declined by more than 35% against Bitcoin, with a further decline potentially on the cards. Historically, whenever the ETH/BTC pair has been bearish, the market has witnessed a decline in the market share of various altcoins.
Developer interest in ETH soared during the pandemic, with the network witnessing a major boom. In November 2021, the total value locked (TVL) inside the Ethereum network rose as high as AUD$230 billion (US$159 billion), up more than 34,000% since March 2020. However, since then, massive withdrawals have left investor sentiment a bit iffy, with institutional players alone taking out close to AUD$662 million from Ethereum-based investment funds since the start of the year.
On the other hand, Bitcoin investment vehicles have registered cumulative inflows of AUD$693 million year-to-date, suggesting that while retail demand may be waning a bit, institutions are still looking to get their hands on the digital currency.
More negative action incoming for Ethereum?
Exiting capital coupled with decreased trust in the decentralised finance (DeFi) industry could result in ETH witnessing further losses in the near term. Also, with the Federal Reserve set to implement another interest rate hike soon, investors may continue to refrain from investing in high-risk assets such as Ethereum.
ETH has failed to reclaim its all-time high value against Bitcoin since June 2017, even though its adoption has been climbing exponentially in recent years. As a result, the altcoin could remain under bearish pressure for the foreseeable future.
More layoffs witnessed
Popular Austrian crypto and stock trading platform Bitpanda has joined a growing list of crypto firms to let go of a sizeable portion of its staff as part of the ongoing bear market. The firm had to lay off approximately 280 of its part- and full-time staff members, bringing its headcount down to 730 individuals.
In recent weeks, Coinbase, Gemini, Bitso, Rain Financial and a number of major crypto firms have had to rethink their staffing needs, laying off anywhere between 10% and 30% of their employees.
Disclosure: The author owns a range of cryptocurrencies at the time of writing.
Trying to get a handle on the markets? Cut through the noise with our overview of the best cryptos to buy right now, explore some strategies for how to trade crypto or see if there's a better platform for you with our guide to the best crypto exchanges.
Disclaimer: Cryptocurrencies are speculative, complex and involve significant risks – they are highly volatile and sensitive to secondary activity. Performance is unpredictable and past performance is no guarantee of future performance. Consider your own circumstances, and obtain your own advice, before relying on this information. You should also verify the nature of any product or service (including its legal status and relevant regulatory requirements) and consult the relevant Regulators' websites before making any decision. Finder, or the author, may have holdings in the cryptocurrencies discussed.
