Ethereum (ETH), the second largest cryptocurrency by market capitalization, has been in deflationary mode for over 48 hours straight, an unprecedented occurrence during a weekend market. This is the first time that Ethereum acts like this, and it is largely attributed to a series of launches on the network that caused an activity spike.
There are more catalysts occurring on the network that might be driving further activity in an environment where ETH activity is already strong, including the upcoming launches of the Arbitrum and MATIC zkEVM, and the BLUR and SUDO token drops.
ETH now been deflationary for over 48 hours straight, even on a random weekend night. Don't think I've ever seen that before. https://t.co/UsZtzAI0N4 pic.twitter.com/JpA67OIhXy
— Hal Press (@NorthRockLP) February 4, 2023
However, the crypto market is known for its volatility since just two months ago, Ethereum lost a significant part of its network activity and became inflationary again, raising concerns among investors. The deflationary nature of Ethereum was expected to become the main driver for the price of ETH in the future, and any deviation from this trend is likely to affect the price of ETH.
In addition to the recent deflationary period, the price of Ethereum has been steadily rising in recent weeks. However, the market is showing some signs of reversal, such as a descending RSI, low trading volume and decreasing volatility. Nevertheless, the potential market recovery is still in an early stage, and it is important for investors to take a long-term view, considering the loss some investors have to cover.
At press time, Ethereum is coming closer to the $1,700 price level, which it failed to break a few days ago. Unfortunately, with the aforementioned signs of reversal, we might see yet another failed breakout attempt, which can cause a wider correction that some bearish analysts were expecting in the last few days.
Tomiwabold Olajide
Denys Serhiichuk
