Why is Ethereum (ETH) price down today?
Ether (ETH) price is down on Dec. 16 and the pre-FOMC rally to $1,350 was obliterated after Federal Reserve chair Jerome Powell issued hawkish statements following a 0.50% hike in interest rates.
The Ether sell-off follows a market-wide decline that has sent Ethereum network fees plummeting by 39.90% in the past 30-days.
The total value locked in Ethereum-based smart contracts also decreased by decentralized finance by 4.49% in 24-hours.
Following the FTX exchange scandal, regulators are attempting to fast-track new regulations on the cryptocurrency sector.
While some analysts believe Ethereum still possesses multiple bullish catalysts that warrant investing in the asset, on-chain data paints a grim picture of its short-term price prospects.
Here are three reasons why Ether price is down today.
Ether price fell as daily fees on the Ethereum network plummeted to $2.9 million, down from pre-FTX levels of $12.8 million on June 13. In addition to the decreasing fees, the network registered lower daily active users (DAUs) from a July 26 peak at 961,196 users to only 367,000 DAUs on Dec. 16.
Post-Ethereum merge tokenomics were designed to help Ether become deflationary. However, with gas fees declining and reduced DAUs, Ethereum has turned inflationary by 0.073% in the past 30-days and added over 7,100 Ether. According to ultra sound money, since the merge, Ethereum’s network is inflationary by over 1,192 Ether.
The total value locked metric is a common way to examine the health and sentiment of a Proof of stake (PoS) blockchain like Ethereum. Ethereum’s TVL reached a yearly high at $83.9 billion on March 31, but since that point, it has shed nearly $60 billion. As of Dec. 15, the network’s TVL stands at $23.46 billion.
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