Ethereum set for high correction amid its $3K triumph - CryptoCrazeNews

Ethereum set for high correction amid its $3K triumph

Ethereum set for high correction amid its $3K triumph

Ethereum set for high correction amid its $3K triumph

Ethereum (ETH), the biggest altcoin, managed to breach the crucial milestone of $3,000 after a long period of delays and rejections. ETH price rally came in after a brief price surge of Bitcoin (BTC) pushing positive sentiments in the crypto market. Experts suggest that this triumph is vital for ETH as other major cryptos have tried to demolish its dominance over the past few months.

Ether records high funding rates

Experts examining the historic funding rates for ETH since 2021. It revealed an annualized range of approx 13-18%. This surge might seem huge but it pales in comparison to the peak ETH touched in early 2021, where it exceeded 200% annualized. This number suggests that despite the current jump, there is still room for more fluctuations. However, it highlights that the crypto market has seen even more extreme conditions in the past.

A growing USD-pegged stablecoin (USDe) supply may have influenced funding rates.

It is not the last time when Ethereum hit the $3,000 mark. At that time market was kind of sitting on time bombs like Terra LUNA, 3AC and FTX collapse. The current environment is seen as positive due to developments going on in the Ether network. This includes Layer 2 (L2) acceleration, restaking yields, and the anticipation of an ETH exchange-traded fund (ETF).

An unseen contradiction emerges while comparing ETH’s market cap, which sits at around $360 billion, with its active daily users. While the market cap has soared, the active daily users on the Ether chain have seen a decline from 120,000 in 2021 to 66,000 in the last year. This major gap raises questions about the valuation relative to actual usage.

New competition in the market

The enthusiasm around Ethereum is compared with the hype of meme coin akin to Shiba Inu. Experts suggest within the competitive space of blockchain platforms, Ether faces challenges with relatively few actual users and high transaction costs, This comes in line with increased competition from alternative chains like Solana and Avalanche.

The crypto community is highly anticipating an ETH ETF approval ahead. However, there are rumors in the market that US SEC chair Gary Gensler may be hesitant to support an ETF tied to crypto with a pre-mine, setting a precedent he might want to avoid.

Amid this Ether price has gained more than 7% in the last 7 days. ETH is trading at an average price of $2,922, at the press time.

Leave a Reply

Your email address will not be published. Required fields are marked *