Ethereum Struggles to Regain $1,900 Amidst Weak DeFi Metrics and Rising Competition
The price of Ethereum continues to face challenges as it attempts to recover the $1,900 mark, with factors such as decreased liquidity, reduced investor participation, and increased competition weighing on its performance.
Decline in DeFi Metrics
Recent data from DefiLlama reveals a decline in Ethereum’s total value locked, dropping from $63 billion in January to $44 billion in February. This decrease is attributed to slower capital rotation into Ethereum protocols, as indicated by the slowdown in stablecoin inflows. Additionally, decentralized exchange trading volumes have also seen a decrease, further impacting Ethereum’s overall performance.
Revenue and Institutional Demand
The sharp decline in Ethereum’s revenue, from $193 million in December to $26 million in February, is a significant concern. Furthermore, data from SoSoValue shows that spot Ether ETFs have witnessed withdrawals for four consecutive weeks, totaling $176 million over the past month. This trend suggests a reduction in institutional demand for Ethereum.
Technical Analysis and Outlook
Currently trading at $1,876, Ethereum is struggling to maintain the crucial support level of $1,875. The daily chart indicates a clear downward trend, with ETH trading below its 50-day moving average of $2,282.50. Bollinger Bands suggest higher volatility, while the relative strength index (RSI) hovers near oversold levels.
Future Prospects
One potential development to watch is the inclusion of staking in Ether ETFs, with Cboe BZX and Fidelity seeking approval for staking in their Ether ETF offerings. If approved, investors could earn staking rewards, potentially attracting more institutional interest in Ethereum.
In conclusion, Ethereum faces challenges in its price recovery efforts due to weak DeFi metrics, declining revenue, and reduced institutional demand. Traders and investors should closely monitor key support and resistance levels to gauge the cryptocurrency’s future performance.