Why is Ethereum (ETH) price down today?

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Ether (ETH) Price Falls Dec 16, Eliminating Pre-FOMC Rally to $1,350 After Fed Chairman Jerome Powell Releases Hawkish Statement Following Rate Hike of 0.50% Did.

The Ether price took another hit when Silvergate Capital Corporation decided to voluntarily liquidate Silvergate Bank. Silvergate Bank was one of the leading crypto-friendly banks before a string of companies shut down over liquidity concerns.

The Ether sale also sparked a wave of long-term Ethereum liquidations, totaling $70 million from March 1-8.

After March 2020, when Ethereum trading volume drops by 90%, there will be a flood of Ethereum mass liquidations.

Some analysts believe Ethereum still has multiple bullish catalysts to justify investing in the asset, but on-chain data paints a grim picture for its near-term price outlook. I’m here.

Here are three reasons why the Ether price is falling today.

Total value locked in the Ethereum ecosystem fell in March

Total value lock metrics are a popular way to examine the health and sentiment of a Proof of Stake (PoS) blockchain like Ethereum. Ether prices fell as his TVL across the Ethereum ecosystem fell from his March 2nd monthly high of $29.7 billion to a monthly low of $28.1 billion. The monthly low came with his 1.75% decline in TVL’s 24 hours on March 9.

The drop in Ether price is due to netflows on centralized exchanges, indicating that investors are sending more funds to CEX than they are withdrawing to decentralized exchanges. On March 7, more than 21.7 million of his Ether were sent to and withdrawn from centralized exchanges. Investors usually tend to move their funds to CEX for more liquidity to sell.

Rising Inflation Raises Fears of Higher Rate Hikes

On March 7, Federal Reserve Chairman Jerome Powell addressed the US Senate Committee on Banking, Housing and Urban Affairs in his semiannual monetary policy report to Congress.

in preparation remarksPowell hinted at higher interest rate hikes to control inflation,

“The latest economic data have beaten expectations, suggesting that the final level of interest rates is likely to be higher than previously expected. If the BOJ shows that the BOJ is ready to increase the pace of rate hikes, it will need to maintain a restrictive stance on monetary policy for some time to restore price stability. The main focus is to use our tools to return inflation to the 2% target and keep long-term inflation expectations firmly in place.”

Powell’s remarks echoed throughout the stock market and are closely correlated with the price of Ether. After expecting only a 0.25% basis point rate rise on March 1, the market is now expecting a 0.5% basis point rate rise, according to the CME’s FedWatch tool.

Ethereum daily active users drop ahead of Shanghai upgrade

Despite briefly overtaking Bitcoin (BTC) on Jan. 8 and having more active users, the Ethereum network continues to see less activity than BTC. In addition to Bitcoin maintaining more active users than Ethereum, the top Ethereum-based NFT company, Yuga Labs launched a BTC blockchain-based NFT auction on March 7 with 16.4 million raised dollars.

Investor expectations for 2023

Originally, the Shanghai hard fork was scheduled for March 14th. On March 2nd, the Ethereum developer announced that he would be delaying the hard fork until April. Ether prices are likely to continue to fluctuate despite on-chain data suggesting the Shanghai hard fork will not bring significant selling pressure.

Investor appetite for riskier assets and interest in DeFi may continue to decline due to the introduction of higher interest rates in the US, but there is also a clearer focus on regulatory stances on cryptocurrencies and the Ethereum network-based protocol. factors such as the eventual increase in It has proven to be a long-term catalyst for price increases.