The deteriorating state of the crypto market has leaked through Ethereum. Ethereum’s market capitalization fell by more than $100 billion last month.
Ethereum traded at $1,809.49, down 6.9% on Wednesday, as the Coingecko chart shows.
The bearish market stance is becoming more consistent as Ethereum appears to be in its comfort zone trading below $4,000 this year.
As the second largest Bitcoin cryptocurrency, Ethereum remains unassailable, maintaining its ranking as the second largest cryptocurrency in terms of market capitalization. ETH ended May with a market capitalization of over $235 billion.
The price action showed a staggering 31% drop from its opening day market value. May 1 gave ETH a hint of hope as its trading volume topped $15.33 billion with a whopping $341.05 billion market cap.
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ETH price on a downtrend
Investor confidence waned in 2022, triggering a massive selloff in crypto assets. Panic intensified from May 9 to May 13 due to the drop in Ethereum’s market capitalization.
The negative market sentiment was caused by the worsening economic situation, inflation, Russia’s invasion of Ukraine and higher interest rates.
ETH transactions in May topped 16,950 at a price of $1,947. This was followed by a huge transaction worth 12.25 million ETH, which is equivalent to approximately $23.86 billion.
ETH opened with $2,072 price action and had an intraday low of $1,748. Trading volume was recorded at $42.46 billion, which translates into a market capitalization of $236.88 billion.
ETH total market cap at $218 billion on the daily chart | Source: TradingView.com
The numbers show a 30% drop in the market value of ETH on the opening day. And experts say ETH’s lowest point could last until July 2021.
What caused the price drop of ETH?
Ether has dropped over the past few weeks. The following are factors that could explain its price drop:
- Ethereum is preparing for its Merge an upgrade where it will be converted from PoW to PoS. However, developers see a security risk in its launch. The PoS chain can be involved in reorganize an issue where the PoS chain could also split two transactions into two versions.
- Ethereum also experienced a decline in user activity and demand, which may have exacerbated its downward movement.
- Declining interest in NFTs and DeFi profitability has led to a drop in trading volumes.
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Ethereum supporters are still constantly absorbing this digital asset, despite the fact that the market remains bearish.
On the opening day of ETH on May 1, its trading value was $2,730, and on May 5, it reached a monthly high of $2,957. It tested the monthly low of $1,721 on May 27 and then closed the month of May at $1,942.
Ultimately, the values show a 28% decline when comparing the opening and closing prices of Ethereum in May.
Featured image from Daily Express, chart from TradingView.com
Credit : www.newsbtc.com