The worsening condition of the crypto market has seeped through Ethereum. The market cap of Ethereum was purged by more than $100 billion last month.
Ethereum was trading at $1,809.49, down -6.9% Wednesday, chart by Coingecko shows.
The bearish market stance is getting more consistent as Ethereum appears to settle at its comfort zone and trade below $4,000 this year.
Being second in line to the top crypto Bitcoin, Ethereum remains unassailable, with it maintaining its ranking as the second-biggest cryptocurrency in terms of market cap. ETH closed May with a market cap of more than $235 billion.
The price action revealed a staggering 31% plunge compared to its market value on an opening day. May 1 gave ETH that hint of hope when its trading volume hovered over $15.33 billion with a whopping market cap of $341.05 billion.
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ETH Price On A Downward Trend
Investor confidence waned in 2022, which propelled a massive sell-off of crypto assets. The panic worsened from May 9 to 13 because of Ethereum’s market cap drop.
The negative market sentiment was brought about by the dwindling economic situation, inflation, Russia’s invasion of Ukraine, and increase in interest rates.
ETH transactions in May reached over 16,950 at $1,947. This was followed by a humongous transaction amounting to 12.25 million ETH or equivalent to roughly $23.86 billion.
ETH opened at a price action of $2,072 and had a $1,748 intraday low. Trading volume registered at $42.46 billion, which signifies a market cap of $236.88 billion.
ETH total market cap at $218 billion on the daily chart | Source: TradingView.com
The figures show a collapse of 30% in ETH’s opening day market value. And experts say the lowest point of ETH can extend to July 2021.
What Triggered ETH’s Price Drop?
Ether has been down for the past few weeks. The following are the factors that could have attributed to its price drop:
Ethereum is getting ready for its Merge upgrade, wherein it will transform from PoW to PoS. However, developers see a security risk on its launch. Its PoS chain could get involved in a reorg issue in which the PoS Chain could split two transactions into two versions as well.
Ethereum also suffered a reduction in user activity and demand, which could have aggravated its downward movement.
A lowered NFT interest and DeFi profitability resulted in a drop in trading volumes.
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Ethereum advocates still continuously devour this digital asset despite the market remaining bearish.
ETH’s opening day on May 1 had its trading values at $2,730, which maneuvered to a monthly high of $2,957 come May 5. It tested on May 27 at a monthly low of $1,721 and then closed the month of May at $1,942.
The values ultimately show a reduction of 28% when comparing the values from the opening to the closing price of Ethereum in May.
Featured image from Daily Express, chart from TradingView.com