Since June 7, Ether (ETH) has faced downward pressure, dropping below its crucial $3,800 support level. As of June 19, despite a series of favorable developments, its price hovered under $3,600, showing no change over the week. Analysts are divided on the reasons behind this bearish trend: some cite a lack of institutional demand for cryptocurrencies, while others point to regulatory uncertainties within the Ethereum ecosystem.
Despite regulatory clearance for ETH, concerns within the Ethereum ecosystem persist. Noelle Acheson, the author of the ‘Crypto is Macro Now’ newsletter, noted her surprise at the lack of positive momentum in Ether’s price following Consensys’s regulatory win. Acheson also questioned whether ongoing regulatory issues related to staking are deterring investor interest.
On June 18, Ethereum ecosystem developer Consensys announced that the U.S. Securities and Exchange Commission (SEC) had wrapped up its investigation into whether Ethereum could be classified as a security, scrutinizing the company’s role in ETH sales. Consensys had taken legal action against the SEC in April after receiving a Wells notice, which suggested that its MetaMask wallet might have violated securities laws.
The decline in Ether’s value has paralleled Bitcoin’s struggles, particularly after Bitcoin faced rejection near $72,000 on June 7. Investors grew wary of the United States’ precarious fiscal health, influenced by high-interest rates and deteriorating economic indicators such as rising wages and increased unemployment. For instance, in May, U.S. average hourly earnings went up by 0.4% from April, while the unemployment rate rose to 4.0% from 3.9%.
Though cryptocurrencies could benefit from worsening macroeconomic conditions in the medium to long term, historical patterns show that investors typically pull back from riskier assets as recession risks loom closer. This sentiment was evident when the U.S. 2-year Treasury yield fell from 4.94% to 4.71% between May 30 and early June, signaling a strong demand for these fixed-income investments.
Dan McArdle, co-founder of Case4Bitcoin, observed that cryptocurrency remains reasonably priced as long as the macroeconomic environment stays stable, supporting a continuing long-term bullish trend. He warned that major economic shocks or significant corrections in the S&P 500 would adversely affect cryptocurrencies in the short to medium term. This could explain the current lukewarm interest in Ether, reflecting heightened recession fears among investors.
Ether has faced additional challenges, despite favorable regulatory news, such as the announcement by SEC Chair Gary Gensler regarding the imminent launch of U.S. spot Ethereum exchange-traded funds (ETFs) within three months. One significant issue has been persistently high network processing fees, which have remained above $4 in the past week.
The risks of recession and potential lack of demand for spot Ether ETFs compound existing issues. Layer-2 scaling solutions like Optimism, Base, Arbitrum, and ZKSync have improved, yet some decentralized application (DApp) volumes have shifted to rivals like Solana, BNB Chain, and THORChain. According to DappRadar, Ethereum still leads in DApp volumes over the last 30 days, but it faces stiff competition from fast-growing networks like Solana, Aptos, Celo, and Fantom.
Adding to the concern, the number of active addresses interacting with DApps on Ethereum has fallen by 40% over the past month, while Solana and Aptos saw increases of 58% and 115%, respectively. Ether’s struggle to break past $3,600, despite the impending launch of spot ETFs and the SEC’s clarification that ETH is not a security, is exacerbated by worsening macroeconomic conditions and potential regulatory uncertainties for token issuers, wallet providers, and exchanges, as highlighted by Noelle Acheson.
Recent consecutive net outflows from the spot Bitcoin ETF raise doubts about whether upcoming Ethereum instruments will attract significant investments. There are concerns that Grayscale’s Ethereum Trust Fund (ETHE) might experience outflows when it is converted into an ETF, similar to the issues faced by the GBTC due to its high fees.
Excited about the potential spot ETFs and how they could attract new investments. Big things ahead for ETH!
Market volatility is expected, but with staking and other innovations, Ethereum will rise again! 🚀
Lack of institutional demand feels like a nail in the coffin. Is anyone really surprised by the price dip?
This downward trend is frustrating. No one seems to want cryptos anymore, and the regulatory landscape isn’t helping.
Been following Ether for a while now, and although the recent dip is concerning, I have faith in its long-term potential!
Seeing the SEC give some green light is reassuring. Regulatory progress can only mean a brighter future for ETH!
Despite the price dip, Ethereum remains a powerhouse of innovation. I’m in it for the long game!
Regulatory progress is always good news. ETHs value might be dipped, but the future is bright!
Ethereum continues to lead in DApp volumes, proving its resilience and innovation in the space. ” 📈
Acheson makes a great point about staking affecting interest. But I still believe in ETH’s potential. Onward and upward!
Network processing fees remain stubbornly high. At this rate, ETH will just keep driving users away to faster, cheaper alternatives.
The competitive landscape is shifting. Ethereum’s losing its edge as new players come up strong. That’s worrying. 😕
Bumps in the road are expected. Ethereum’s fundamentals and future prospects remain solid.
Regulatory clarity from the SEC is massive! It shows ETH is moving in the right direction.
Regulatory clearance and impending ETFs are game-changers for Ethereum. Excited for what’s to come! 🌟
It’s great to see regulatory issues being addressed. It can only make Ethereum stronger in the long run!
Disappointed ! Even with favorable news, ETH can’t seem to catch a break. Regulatory clarity should’ve boosted its price!
Too many uncertainties around staking and regulatory issues. Why would anyone want to risk their money in ETH right now?
Active addresses dropping by 40% is alarming! People are moving away from Ethereum, and it’s showing in the price.