The increase in the price of ETH mid-July to mid-August could continue to lose momentum as investors seek to better understand the impact of Merge, the company's key upgrade event. Ethereum – help the network move from PoW to PoS with other updates in the future.
“Investors may have realized that the impending transition of Ethereum will not address concerns about scalability or high transaction fees.”
In spite of Merge likely to spur short-term appreciation of ETH but the long-term outlook for the asset remains murky due to weak macroeconomic sentiment and technical indicators. Bitcoin is on a decreasing trend.
Price Ethereum currently down 11% and trading at $ 1,502. While the bulls seem to be facing the $ 1,720 barrier on the way up, here are three factors that could cause ETH price to continue to decline in the short-term.
Interest in Merge
Experts are warning about the possibility of replay attacks happening after the Merge update scheduled for September.
During the Ethereum upgrade in 2016, the network was repeatedly hit by a replay attack, in which hackers replay user transactions for tokens. Industry participants have announced safety measures.
The most worrying issues can also come from the appearance, around the time of Merge, of Ethereum forks. In the event of a chain split, a copy of the entire Ethereum ecosystem, including all coins, NFT and its application, will be created.
However, Ethereum creator Vitalik Buterin assured the community that the “fork” would not harm the original ETH network.
Supply on exchanges increases
After the price of Ethereum fell over the past week, Santiment noted that the supply of ETH on exchanges spiked just before the price drop. It should be noted that this spike is due to Binance transfer ETH from an unlabeled wallet to an existing labeled wallet. Specifically, Binance made a big transfer worth 2.37 billion VND USDT between two Binance cold wallets and another transfer of 1.49 million ETH to the Binance 8 wallet.
If the supply on exchanges continues to grow, it could mean that holders are selling off their coins on the market.
The global macroeconomic landscape will continue to play a large role in determining market dynamics cryptocurrency and finally Ethereum price. According to Santiment, Ethereum is showing a high correlation with the S&P 500.
After raising the base rate by 3/4 percentage point at each of the previous policy meetings, investors will closely watch the US Fed's attitude on the pace of rate hikes.
Last night, Vietnam time, Fed Chairman Jerome Powell commented in a speech at the annual economic policy conference Jackson Hole that:
“Price stability is the bedrock of the economy – without price stability, the economy doesn’t benefit anyone.”
Powell argued that a one-month improvement was not enough to bring inflation back to 2% and that “restoring price stability will take some time and will mean using Fed tools.”