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The second largest cryptocurrency has updated the price minimum since July 2021 twice in a week. Experts told how the stock market, DeFi protocols and the risks of a new virus are connected with this
On May 27, the Ethereum rate continued to fall, updating the price minimum for the second time in the last two days. On May 26, the value of the cryptocurrency fell by 10%, dropping below $ 1.8 thousand, on the morning of May 27, ETH showed a daily drop of another 7%, the value of the coin fluctuates around $ 1.7 thousand.
At the same time, the largest altcoin by capitalization decreased in price much more than bitcoin. The first cryptocurrency fell by 2% on May 26 and by 2.6% on May 27, to $ 28.9 thousand, at the moment dropping to $ 28 thousand.
Experts of “RBC-Crypto” explained the reason for the more severe fall in the price of Ethereum and the unusual divergence of the rates of the main cryptocurrencies.
Just before the opening of the American session on May 26, there was a sharp bearish impulse on the main cryptocurrencies, said Andrey Podolyan, CEO of the Cryptorg platform. He explained that the coins went just below their support points, made a false ejection, and with the discovery of America, the rates turned dramatically upwards.
“However, all this movement fits into the framework of the flat, which has been going on for a week. Bitcoin and Ethereum are trapped in narrow ranges and cannot yet escape from them, “Podolyan explained.
The fall in ether comes along with the general decline in the crypto market against the background of investors’ expectations of further tightening of the monetary policy of the US Federal Reserve, says Roman Nekrasov, co-founder of the ENCRY Foundation. The expert said that there are nuances that show the preferences of investors in the crypto market.
“After the decline of bitcoin, it was quickly bought by bulls, and with ether, the buyback was not so intense and a little later. As a result, an amazing and rather rare discrepancy in the directions of movement of the bitcoin and ether rate arose – bitcoin was growing, and the ether was falling. In my opinion, this suggests that market participants are more willing to believe in the upcoming growth of bitcoin and rather see it as an asset that promises profit than in ether, “Nekrasov shared.
The air is also under pressure and local news about the loss of market share deFi – Avalanche and Tron are actively luring decentralized protocols to themselves, according to the expert. He added that against the background of the US Federal Reserve rate hike, a number of investors could completely reduce their share in DeFi protocols, which, although they are highly profitable, are also associated with high risk.
“Some market participants could consider that in the current conditions the risks exceed for them the possible benefit from high profitability, and transfer money to more traditional assets, whose yields began to grow following the increase in the key rate of the US Federal Reserve, such as Treasury securities,” Nekrasov concluded.
Since the beginning of the quarter, the broadcast has decreased by more than 50%, explained the representative of the Exmo.me Maria Stankevich. In her opinion, this is mainly due to the fact that investors reduce their exposure to riskier assets, including bitcoin and ether, in the face of higher interest rates.
The expert pointed out that due to the difficult macroecronomic situation (the possibility of a new virus), everyone is waiting for additional sales in the stock market. This, in turn, can affect the cryptocurrency market.
“In addition, the pressure on ether is further exacerbated by the crumbling DeFi ecosystem. The TVL deFi ecosystem, built on Ethereum, fell from a whopping $107.50 billion to $55.30 billion. This decline of 48.5% indicates that users are panicking and withdrawing their funds from DeFi products, which, in turn, affects the ether,” Stankevich added.
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