The lack of network activity and competition from other cryptocurrencies could potentially lead to Ethereum (ETH) losing support at the $1,600 level.
Recent market analysis shows that ETH’s price surged by 31.3% in March, but doubts are now arising about its ability to sustain this support level. Negative developments in the cryptocurrency sector, such as financial troubles at the Digital Currency Group and legal action against major exchanges Binance and Coinbase, have contributed to this bearish sentiment.
On-chain metrics also indicate a decline in demand for Ethereum, with the number of addresses holding a minimum of $1,000 worth of ETH deposits reaching a six-month low. The high transaction fees on the Ethereum network have deterred new investors, leading to a lack of new users in decentralized applications (DApps) and a decline in active addresses across various sectors.
Meanwhile, competitors like Solana are gaining traction, with Visa incorporating Solana’s blockchain settlement capabilities and Coinbase announcing support for converting USDC to Solana’s native chain. These developments, coupled with the overall bearish sentiment in the market, increase the likelihood of ETH’s price falling below the $1,600 support level.
In summary:
– ETH’s ability to sustain support at $1,600 is being questioned due to a lack of network activity and competition from other cryptocurrencies.
– Negative developments in the cryptocurrency sector, including financial troubles and legal action against major exchanges, contribute to the bearish sentiment.
– On-chain metrics show a decline in demand for Ethereum, with fewer addresses holding significant ETH deposits and a decrease in active addresses in DApps.
– Competitors like Solana are gaining traction, further challenging Ethereum’s position.
– Overall, the likelihood of ETH’s price dropping below $1,600 has increased.
