On Friday (May 27, 2022), Ether dropped as much as 5.3 percent to approximately $1,729. Thus, it brings this year’s losses to 53 percent. It is well below the crucial $2,000 mark, which it needs to trade above substantially. If bearish sentiment eases, other coins tied to protocols like Avalanche, Solana, and Polkadot were also falling between 5% and 8%.
Almost everything in cryptocurrency is a sea of red. Altcoins like Ether, Solana, and Avalanche are suffering. Thus, some traders are at a loss. However, Ethereum has been showing indicators of a lack of demand for quite some time.
Bloomberg (May 27, 2022)
The collapse of Terra, a blockchain ecosystem, forwarded the already bearish market into this month. Thus, Terra’s operators approved a proposal to restart a completely new blockchain on Wednesday. Investors in the remainder of Defi, on the other hand, were less than convinced. A flaw in the process of making the Ethereum network less energy-intensive exacerbated the problem.
For cryptos, bearish sentiment remains the dominant trend.
Edward Moya, senior market analyst at Oanda
Moreover, He highlighted that Ethereum’s increasing number of competitors may intensify the collapse of unpredictable issues in its version. It is known as the Merge.
Following Terra’s collapse, demand for block space on the Ethereum network has considerably decreased. It indicates that the network’s so-called gas fees are decreasing. According to Glassnode statistics, gas prices have been declining since December and have just touched multi-year lows.
Even if it was only one anecdotal day’s data, Solana’s NFT volume beating Ethereum is a severe blow to investor confidence. It will remain the decentralized web’s go-to base layer protocol. Mati Greenspan, founder of crypto research firm Quantum Economics
Mati Greenspan, founder of crypto research firm Quantum Economics
The whole crypto market is now down, so we should be cautious about drawing long-term inferences from short-term data.
However, when combined with poor price performance, this is expected to aggravate short-term challenges for the token. Defi developers are picking themselves up after Terra’s demise cut the sector’s overall worth in half. The depressed markets are not going to persuade them to return to the game.
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Source: Bloomberg