Here’s Why Ethereum Tanked Despite Reaching a 2-Year Price High

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Here’s Why Ethereum Tanked Despite Reaching a 2-Year Price High
by Reena Shaw 23 hours agoin Altcoin News, Industry2 min read 0
Here's Why Ethereum Tanked Despite Reaching a 2-Year Price High
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The entire cryptocurrency market slumped following the massive downside correction breaching crucial levels along the way. Ethereum, the second-largest cryptocurrency, was one of the worst-hit among the top altcoins by the latest price action. While it was just recently that ETH’s price climbed to $470, a level was last seen in July 2018, at the time of writing, however, ETH suffered a loss of nearly 20%.

Ethereum’s rally was not backed by strong fundamentals
Ethereum’s on-chain activity was in a steady decline since mid-August despite its price reaching a 2-year high regardless of the worldwide stock market regression. While it did reach a favorable position in terms of its price, a few metrics, on the other hand, noted opposed the positive sentiment.

As noted by the crypto-analytic platform Santiment, ETH’s daily active addresses [DAA], as well as network growth, appeared to low with respect to its price hitting levels above $400.

While exchange deposits, which is the number of coins held in exchange addresses, declined significantly, the figures for exchange wallets, however, exploded to a 6-month high of 1.09 million ETH signaling the traders were less accumulating and more trading the coin in anticipation of a dip, according to Santiment.

Additionally, according to ITB’s tab, Ethereum’s on-chain metrics signaled bears having an upper hand with respect to its price.

The DeFi factor
Ethereum has been a haven for DeFi protocols. Space has seen a massive inflow of capital over the past few months which has resulted in explosive figures in terms of TVL. While a few ecosystems have shown consistency, others just came and exited the market. It is important to note that DeFi is still in an experimentative phase.

Hence, falling stocks could have propelled DeFi to experience a similar reversal. And as money flowed out of the DeFi, Ethereum and Bitcoin lost significant value causing the altcoins to crash as well.
ethereum lost it in term of DEFI due to high mining fee.