Briefly –
- ETH lost more than 40% within seven days, approaching the $1K level.
- Crypto assets struggled for the past week amid fears of the lending platform, Celsius, collapsing and a broad financial space downturn.
This week had digital currencies on dramatic declines, with nearly all to-100 assets witnessing a bloodbath amid substantial plunges over the previous week. Bitcoin lost 30% in that timeframe, whereas ETH’s weekly losses stand at 40%. Moreover, Ethereum nearly hit $1,000, a disturbing crash from the November ATH of $4,700.
What’s Behind ETH’s Fall?
Broad Market Turmoil
While publishing this content, the crypto fear & greed index, which gauges market sentiment, stood at 7, exploring the lowest levels in years. That reflects dominant fears that coins might decline further. Risky assets are suffering as leading banks globally introduce stiffer financial tightening policies to control the elevated inflation. Also, recession fears plus escalating living costs see individuals reluctant to purchase digital tokens.
The extreme market conditions deteriorated the DeFi space. Decentralized finance is crucial in the overall crypto space, with many DeFi apps built on the ETH blockchain. Severe price crashes contributed to Ethereum’s struggle.
Also read:Ethereum Merge Delay
Ethereum (ETH) was the first crypto to launch smart contracts, attracting multiple apps on its blockchain. Nevertheless, high gas charges and network congestions have many individuals seeking alternatives. Ethereum will continue losing market shares until it completes a staged update to solve these issues.
The ETH merge is a critical milestone for the blockchain. Though this update will not fix congestion and gas problems, it’s a crucial step towards such capabilities. The merge means a shift to PoS from the PoW model. The upgrade has excited participants, but delays caused concern.
Staked Ethereum Issues
DeFi platform sees increased distrust following Terra’s collapse and Celsius’ move to halt withdrawals. Meanwhile, there’s stake Ethereum (stETH) on Lido, a DeFi network. stETH disturbed investors as it lost the Ethereum peg. That means on stETH isn’t worth one Ether. Huobi reports show plunging stETH might catalyze multiple liquidations.
Ethereum launched recoveries overnight. While publishing this blog, the alt traded at $1,201.61. 7.94% up over the past day. However, ETH is yet to confirm stable uptrends.
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