Ethereum's price is currently trading down 4% at $1,637. The ETH price rebounded slightly after dipping to lows of $1,524 on Aug. 20. While the bulls seem to be facing a hurdle at $1,720 presently, here are three factors that may weigh down the ETH price in the short term.
Three factors that may affect ETH price
Increasing supply on exchanges
After the Ethereum price fell in the past week, Santiment noted that there was a huge spike in ETH's supply on exchanges just before the price sank. It was noted that this spike was due to Binance moving ETH from an unlabeled wallet to an existing labeled one.
As reported by U.Today, massive crypto fund transfers were spotted involving Binance wallets. One massive transfer of 2.37 billion USDT between two Binance cold wallets and another large transfer of 1.49 million ETH went to a Binance 8 wallet.
If the supply on exchanges continues to rise, it might mean that holders are offloading their coins onto the market.
Concerns regarding the Merge
Experts are issuing warnings regarding the possibility of replay attacks occurring after the Merge update scheduled for September. During the Ethereum upgrade in 2016, the network was under constant attack from so-called replay attacks, in which hackers replayed user transactions to obtain tokens. Participants in the industry have already announced safety measures.
The most concerning issues can also come from the emergence, around the time of the Merge, of offshoots of Ethereum. In the event of a chain fork, a duplicate of the entire Ethereum ecosystem, including all of its coins, NFTs and applications, would be created. However, ETH creator Vitalik Buterin assures the community that "forks" will not harm the original ETH network.
The global macroeconomic backdrop will keep playing a big role in determining crypto market momentum and, ultimately, the Ethereum price. According to Santiment, Ethereum is showing a heightened correlation with the S&P 500. The annual meeting of the Federal Reserve Bank of Kansas City is underway in Jackson Hole, Wyoming.
After raising its benchmark rate by three-quarters of a percentage point at each of its previous two policy meetings, investors will be listening closely for any hints about how the U.S. central bank is thinking about the pace of interest rate increases leading up to its Sept. 20-21 policy meeting.