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Ethereum’s future looks bumpy as network loses 5.5% of its locked capital

Posted: 3 June 2022 5:18 pm
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ETH's value is currently hovering around its 200-day lows, down more than 60% from its all-time high of AUD6,600 (US$4,800).

  • News of ETH's highly anticipated merge event has failed to garner any monetary support for the digital currency.
  • Ethereum's monthly losses currently stand at -34% while the network's total market share has slipped down to 16.5%.
  • The total market capitalisation of the crypto sector currently stands at AUD$1.80 trillion, up 1.7% since 2 June.

After having touched the AUD$2,750 (US$2,000) psychological threshold on 31 May, Ethereum has showcased multiple corrections, taking the altcoin below AUD$2,450 (US$1,800). At press time, ETH is trading at AUD$2,508 while exhibiting a 14-day loss ratio of 10%.

Earlier this week, Ethereum core developer Tim Beiko revealed that the trial of the highly anticipated Ropsten testnet would take place within the coming week. The trial will serve as a precursor for Ethereum's switch from a proof-of-work (PoW) to a proof-of-stake (PoS) consensus mechanism.

Despite the news, Ethereum's price action has remained largely lacklustre, even though the altcoin did jump by 10% on 30 May, albeit briefly. The final transition, which is slated to take place sometime in August, may yet not have been factored into ETH's price. A future hike may potentially be on the cards.

Ethereum's on-chain data has also continued to remain dull. The volume of inflow transactions stayed relatively flat over the past 3 months. To elaborate, over the last 7- and 30-day stretches, ETH's transaction inflows have dropped by 6% and 8% respectively.

Similarly, Ethereum's outflow rate, which is determined by aggregating the number of transactions leaving CeFi exchanges for individual wallet addresses, has also been on a decline since March.

The total value locked (TVL) across the ETH ecosystem has dropped by 5.5% since the altcoin started on its monetary downtrend approximately 21 days ago. On 10 May, the network's TVL stood at US$28.7 billion, with the metric now down to US$27.1 billion. The drop could have been compounded by the recent Terra Luna crash.

How to buy Ethereum

ETH's price action to remain lacklustre?

Despite the upcoming merge event being one of the most significant events in Ethereum's history, the altcoin has continued to showcase very poor financials. For example, the currency's valuation remains at a 200-day low, down a staggering 60% from its all-time high value achieved last November.

Volatility in Ether's inflows and outflows could provide day traders with a lot of leeway to draw profits in the near term. However, any sort of long-lasting bullishness is unlikely to persist.

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.

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