The cryptocurrency market’s recent rally appears to have halted. The prices of leading cryptocurrencies have rallied for a few weeks. This has been helped by renewed confidence in the market and widespread anticipation for Ethereum’s upcoming Merge to Proof-of-Stake.
But, these digital assets have slumped over the past 7 days as momentum wanes. The top two cryptocurrencies, Bitcoin and Ethereum have tumbled in the past one week as the broader market has suffered a correction.
The prediction came into play as bitcoin plunged from almost $25,000 during that period to around 21,335. In a similar trend, Ethereum has lost 17.52% in the last seven days. The coin is trading at $1,585 according to data from CoinMarketCap as at the time of writing this.
Ethereum market overview
After the cryptocurrency market bounced from its June lows in July and early August, many market participants had placed their hopes on the bullish rally to continue into the fourth quarter.
Without a doubt, the strongest catalyst for a potential surge ahead is Ethereum’s Merge event, scheduled to ship around September 15. However, the previously buzzy Merge narrative has started to lose steam over the past week.
And this loss of momentum is connected to Ethereum’s on-chain activity which has been declining because of the diminishing interest in DeFi and NFTs.
Citing data from IntoTheBlock, crypto analyst Scott Melker shows the significant drop in ETH gas fees paid. This clearly shows the drop in the Ethereum network activity. In his three key observations, analyst Melker notes:
“Total fees have dropped 48% in the last 90 days. Net issuance has increased 3% in the last 90 days. The average transaction paid by users in the Ethereum network has decreased 50% in the last 90 days from $5.2 to $2.6”
Despite the loss of momentum, the number of ETH locked in the Ethereum 2.0 deposit contract has reached a new high. It has hit an overall of 13.34 million.
According to data from OKLink, the total number of ETH deposited in the Ethereum 2.0 staking contract marked a new all-time high of 13,340,584 (13.34 million) ETH. At the time of writing this line, the assets were worth $21.3 billion.
Per OKLink data, nearly 36,000 ETHs have been added weekly since the beginning of August, which brings the total number of coins staked this month to 153,000 ETH, worth $244.34 million at the current exchange rate.
Also, in a tweet on Sunday, on-chain analytics firm Santiment Feed reveals that it expects the crypto markets to rally again as short trades pile up on exchanges following the crash over the weekend that has brought fear in the market to levels last seen in June.
“After Bitcoin fell below $20.9k and Ethereum below $1,540 yesterday, markets have rebounded a bit. Exchanges are seeing high levels of short trades coming in, as people fear drops to June levels again. As long as they bet against markets, there is a higher chance of a rise,” Santiment wrote.
What this means
The growing number of depositors on the Ethereum 2.0 contract suggests that investors are bullish about Ethereum and have positive expectations about the project.
Nevertheless, there are still indications that the broader market hasn’t decided on a rally yet.
Crypto pundit Lark Davis warned that several investors would be taken in by relief rallies perceiving it to be the start of a bull run. Furthermore, he warned that crypto enthusiasts should expect more sideways movement in the crypto market during this bear cycle.
In this connection, the only digital asset worth your bet at the moment is Ethereum. Its upcoming Merge is expected to push its market price above $3,000, at least.
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