Ethereum Is Being Held Back by $1,600 as Santiment Declares ETH a Deflationary Asset
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Ethereum bulls seem to have turned things around for the second-largest cryptocurrency after raising prices from the $1,300 mark to the $1,660 area over the past few days. However, the $1,600 resistance has proved difficult to break to secure a sustained bullish move.
Ethereum has recorded its most gains in a single week for the first time since July 2022, when it once again outperformed Bitcoin, the market leader. Ethereum switched to a Proof-of-Stake (PoS) consensus mechanism in mid-September, replacing miners with validators.
That said, the declining price momentum of ETH is caused by a variety of factors.
First off, following a spike on October 10, the number of active Ethereum addresses has continued to drop, making lower lows on a daily chart.
Participants’ market trust is falling as a result of declining active addresses. Having said that, another concerning development is the recent 7-month low of 1,158 addresses for the number of Ethereum addresses holding 10,000 or more Ether.
This could imply that whale entities sold off some of their holdings after the last push as Ethereum’s price movement faltered.
Additionally, data from CryptoQuant indicates that price increases were prompted by whales’ deposits on the exchange. It’s interesting to note that as Ethereum prices increased, exchange inflow (mean) also increased significantly.
It is possible to view the current upsurge as a purposeful pumping event by the bear market, which might serve as an exit strategy before a more significant decline.
Ethereum Now a Deflationary Asset: Santiment
In other news, Ethereum’s inflation rate, or net issuance, has decreased from 3.6% to almost 0% in recent weeks. Ethereum’s net issuance, according to data from IntoTheBlock, has fallen below zero. It indicates that Ethereum is now a deflationary coin, one whose supply decreases over time rather than rises. The future price of ETH may increase due to the current supply deficit.
The discussion regarding ETH outperforming Bitcoin has once more been sparked by the recent price increase (BTC). While the price of ETH is increasing significantly, according to on-chain data source Santiment, address activity has been declining. Santiment further noted:
“Ethereum’s price dominance over #Bitcoin and most of #crypto has continued as October is coming to a close. This has come following a spike in new $ETH addresses created. Address activity will likely need to recover for a confident continued rally.”
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