ETH falls to three-week lows as the London hard fork approaches
The price of Ether (ETH) collapsed on July 20, alongside Bitcoin (BTC), which fell below $ 30,000.
The ETH / USD pair fell 5.41% to an intraday low of $ 1,720 – roughly $ 400 above the 2018 all-time high, which would be major psychological support.
The pair rose as high as $ 1,994 on the Coinbase exchange on Sunday. Meanwhile, its price action looks very much like Bitcoin, the benchmark cryptocurrency that peaked locally at $ 32,450 on Sunday but was then corrected to $ 29,507 in daily trading.
BTC / USD, ETH / USD daily chart | Source: TradingView
The crash also followed Ethereum network co-founder Anthony Di Iorio’s withdrawal from the crypto industry, in part due to personal safety concerns. Di Iorio, who probably owns a lot of ETH, hinted to Bloomberg in an exclusive interview that he would liquidate all of his crypto-related assets without explicitly mentioning it.
“[Crypto] really just a tiny percentage of what the world needs, ”he said, adding that he“ wanted to diversify so as not to be a crypto guy but a solver. ”“ solve complex problems ”.
Has FOMO been forgotten by the hard fork?
The recent sell-off took place despite Ethereum’s upcoming network upgrade. This code update, known as the London Hard Fork, is a huge step forward in converting Ethereum into a faster and scalable proof-of-stake network from a performance-hungry proof-of-work network.
But the most talked about feature in the upcoming hard fork is deflation. The upgrade is expected to burn some of the fees paid to the miners, thereby reducing the supply of Ether. The cryptocurrency education platform CoinMonk noted in March that the London hard fork upgrade could burn 1 million ETH in 365 days, which is almost one percent of all coins on the network.
Grayscale, a New York-based digital asset investment firm, also wrote in a report in February that the deflationary dynamic would make ETH’s outlook extremely optimistic. ETH / USD rebounded nearly 180% to a record high of $ 4,385 after the report was released.
The recent downturn in the Ethereum market has raised concerns about its ability to deter FOMO from the London hard fork. For example, TradingView analysts said in Update Your opinion that inflationary pressures from the US market may have depressed sentiment on the ETH / USD pair.
ETH / USD daily chart | Source: TradingView
In particular, the US Department of Labor released its June Consumer Price Index (CPI) report last week. The latest data shows that US inflation rose 0.9% to 5.4% in June, faster than it did during the 2008 financial crisis. Both bitcoin and ether prices fell after the report was released.
“Bitcoin has usually been viewed by crypto investors as a hedge against inflation,” added TradingView analysts:
“In this case, however, the fact itself is less important than what the Federal Reserve can respond to. Traders have started selling cryptocurrencies like Ethereum and Bitcoin, fearing that sustained soaring inflation will cause the Fed to withdraw its quantitative easing policy.
But not everyone discounts. Konstantin Anissimov, CEO of the CEX.IO exchange, for example, predicts that the price of ether will reach USD 3,000 after the hard fork in London.
“The Federal Reserve has increased its balance sheet to more than $ 8 trillion since early 2020 – a significant increase,” he said, adding that the drop in prices in the cryptocurrency market is an opportunity for investors to accumulate and hedge against death Declines in traditional markets.
“Investors can accumulate cryptocurrencies at a discount while having confidence in their ability to act as an inflation hedge. Both of the top cryptocurrencies are likely to retest the $ 45,000 and $ 3,000 price levels, respectively.
Disclaimer: This article is for informational purposes only, not investment advice. Investors should research carefully before making a decision. We are not responsible for your investment decisions.
According to Cointelegraph