Ether Price Dips Amidst Bitcoin Dominance and Reduced Ethereum Network Activity

Today's Correction Exploring the Reasons Behind the Decrease in Ether's Price by Cointelegraph

Why is ETH price down today?

Source: TradingView

Ether (ETH) has experienced a 3.18% price drop on January 9, following a period of reduced activity on the Ethereum network and a shift in investors’ focus towards Bitcoin (BTC) amidst the impending spot ETF decision.

Bitcoin Dominance and Spot ETF News Take Center Stage

The recent sell-off in Ether coincides with Bitcoin’s continued dominance in the cryptocurrency market, fueled by the anticipated approval of a spot BTC ETF on January 10. While some experts speculate that the approval of a Bitcoin ETF could ultimately benefit Ether’s price, the second-largest digital asset has started the year with a 0.5% decline.

Bitcoin’s dominance in the market reached 50% on October 15, 2023, and has remained above that crucial level ever since. Although the dominance briefly waned on December 30, 2023, it quickly bounced back at the beginning of 2024 and currently stands at 53% as of January 9.

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Traditionally, a decrease in Bitcoin dominance suggests positive prospects for altcoins, potentially signaling the arrival of an altseason. However, the desired outcome has yet to materialize, leading to continued market uncertainty.

Source: Newhedge

Ethereum Network: Revenue and Fees Waiver

Ether’s price decline coincides with a significant drop in Ethereum network fees. Within a 24-hour span on January 9, Ethereum network fees decreased by 10%, and over the course of 30 days, they dropped by 6.7%. The current daily fees amount to $6.9 million, compared to the monthly peak of $15.5 million recorded on December 15, 2023.

In line with the decline in fees, the Ethereum network has observed a reduction in its daily active users (DAUs), which now stand at 325,255 as of January 9. This represents a 12.5% decrease within the span of seven days.

Source: TokenTerminal

As Ethereum network activity dwindles, other protocols such as the Bitcoin BRC-20 standard and Solana (SOL) are gaining momentum and attracting increased attention.

Mixed Expectations for Ether in 2024

Market analysts hold varying views on Ether’s short-term and medium-term price performance. Veteran trader Peter Brandt suggests that Ether presents a short trade opportunity if its price falls below $2,100. On the other hand, independent market analyst Scott Melker points out a potentially oversold condition, highlighting a bullish divergence in the ETH/BTC pair on the weekly timeframe.

The demand for high-risk assets and interest in decentralized finance (DeFi) may continue to dwindle due to macro events, the emergence of new blockchains, and decreasing trading volume. However, the launch of Ethereum-based protocols and the potential introduction of a spot Ether ETF may serve as long-term catalysts for price growth.

Q&A: Addressing Readers’ Concerns and Providing Further Insights

Q: How does the approval of a Bitcoin spot ETF impact the value of Ether?

A: The approval of a Bitcoin spot ETF could potentially benefit Ether’s price in the long run. Increased mainstream adoption and attention towards cryptocurrencies, along with regulatory developments, can positively impact the overall market sentiment, benefiting major digital assets like Ether.

Q: Why has Ethereum’s network activity decreased in recent days?

A: Ethereum’s network activity has experienced a decline due to reduced fees and a subsequent drop in daily active users (DAUs). Additionally, the rise of other protocols, such as those based on the Bitcoin BRC-20 standard and Solana, has attracted attention and diverted some activity away from the Ethereum network.

Q: Are there any upcoming developments that could impact Ether’s price significantly?

A: Two potential developments could impact Ether’s price in the future. Firstly, the introduction of Ethereum-based protocols and decentralized applications (DApps) could increase network activity and demand, potentially driving up the price. Secondly, the introduction of a spot Ether ETF would provide accessibility and exposure to a wider range of investors, potentially leading to increased demand and price growth.

Future Outlook and Investment Recommendations

While short-term price predictions can be uncertain, the underlying fundamentals of Ethereum remain strong. The ongoing development of Ethereum 2.0, which aims to improve scalability and energy efficiency, and the continued growth of decentralized finance (DeFi) on the platform, make Ether an intriguing long-term investment opportunity.

Investors should closely monitor market trends, regulatory developments, and the progress of Ethereum’s upgrades. Additionally, keeping an eye on the overall cryptocurrency market, especially Bitcoin’s performance and any related ETF approvals, can provide valuable insights into Ether’s future price movements.

In conclusion, Ether’s recent price decline can be attributed to multiple factors, including Bitcoin’s dominance in the market, reduced Ethereum network activity, and speculative investor sentiments. However, opportunities for growth and price appreciation still exist, especially considering the potential catalysts on the horizon. As always, thorough research, risk analysis, and careful decision-making are essential when considering any investment in the cryptocurrency market.

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Reference List:

1. Celsius: Unstake Your Thousands of Ether, Possibly Easing ETH Selling Pressure – Link
2. Bitcoin Rebounds to $44k as Spot BTC ETF Approval Looks Increasingly Likely – Link
3. BTC Price at $43k as Smart Money Bets Big on Bitcoin Ahead of Potential ETF Approval – Link
4. MicroStrategy is Already Up Nearly $1B from Bitcoin in 2024 – Link
5. Which Gaming Guild Positioned Itself Best for the Bull Market? – Link
6. Solana’s SOL Dips Over 100 Spots, Slips Back in Binance Crypto Ranking – Link
7. Protocol Solana’s Rebound: The Real Thing? – Link
8. Ethereum Fee and User Charts – Link

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