Bitcoin has been showing strong gains recently, with multiple attempts to break through the resistance range between 28000 and 28500. In contrast, Ethereum has been relatively weak, with only one attempt to break through the resistance level of 1750. This article will briefly analyze Ethereum's recent price movement and the factors that may have influenced this movement.
ETH/BTC: Down since 2022 MERGE
Ethereum (ETH) has performed relatively weakly relative to Bitcoin (BTC) over the past year. From the beginning of 2022 to June, the ETH/BTC trading pair was in a downward trend, falling from 0.081 to around 0.050. Then, due to the positive news of ETH's "merge" upgrade, the price rebounded, and by September 2022, it had risen to around 0.8. However, since the "merge" upgrade, the ETH/BTC trading pair has been on a downward trend as a whole, and is currently around 0.058, close to the weekly 200-day exponential moving average (EMA200).
However, in the long run, the ETH/BTC trading pair shows an upward trend. If we look back at the bear market in 2018, the lowest point of ETH/BTC reached 0.01, and in the bear market from 2022 to now, the lowest point of ETH/BTC has also remained around 0.05. This is mainly due to the continuous development and growth of the Ethereum ecosystem, which has accumulated a large amount of on-chain value.
ETH's performance is affected by a variety of complex factors, including macro and micro factors. On the macro level, factors such as the Federal Reserve's monetary policy and the SEC's regulatory attitude have an impact on ETH's performance. On the micro level, the development of the ETH ecosystem, the adoption of Layer 2 solutions, the supply of tokens, and market participation also play an important role. Below we will focus on analyzing the factors that have caused recent changes in ETH's performance.
The first is the sharp drop in gas consumption, which has led to ETH inflation. In August and September 2023, the transaction activity on the Ethereum chain decreased significantly. There are multiple reasons for this phenomenon. On the one hand, there are no new popular projects for the time being, which has led to a decrease in transaction volume; on the other hand, some potential airdrop projects have suffered hacker attacks and project rugs!
In general, the number of newly added staking nodes has decreased significantly compared to the second quarter of 2023.
Currently, the number of nodes waiting to participate in staking is 5723, and Ethereum can add up to 2700 new staking nodes per day. Therefore, if no new tokens are added, it will only take 2 to 3 days to process these waiting nodes. This is the period with the least number of nodes waiting to participate in staking since the Shanghai upgrade!
The founder has been selling ETH for the past two months
The address associated with founder Vitalik has been continuously transferring Ethereum (ETH) to exchanges. The most recent one was on October 7, when he again transferred 1,000 ETH (about $1.64 million) to the Bitstamp exchange. In the past two months, this address has deposited a total of 4,400 ETH (about $7.23 million) to Bitstamp.
FTX hacker sold ETH, bringing short-term selling pressure
In the past seven days, the main event affecting Ethereum (ETH) was the FTX exchange hacker who sold ETH and bought Bitcoin (BTC) starting on October 1.
In November 2022, shortly after FTX exchange filed for bankruptcy, hundreds of millions of dollars began to flow out of the exchange balance and into the hacker's address. Then, on November 21, 2022, the hacker dispersed 185,000 ETH (worth $308 million) stored in 13 addresses and put them in a dormant state. After 10 months of dormancy, the hacker began to transfer and sell the ETH in these addresses on September 30.
From September 30 to October 6, hackers transferred 75,000 ETH (worth $120 million) from 5 addresses. Among them, 71,000 ETH were exchanged for BTC through THOR Chain, and 2,700 ETH were exchanged for 165 tBTC and bridged back to the Bitcoin network through the Threshold Network. In addition, 1,500 ETH was transferred through the privacy network RAILGUN Project. This series of transactions also led to THOR Chain announcing that it entered a temporary maintenance state on the afternoon of October 6.
Currently, the hacker still holds 110,000 ETH (worth $176 million) in 8 addresses on the Ethereum network. Five of the original 13 addresses have been cleared.
When looking at the changes in Ethereum (ETH) holdings, we can see that the overall trend is downward. In January 2023, when the price of ETH rose to $1,600, the holdings reached an annual high of about 2.37 million ETH. In April, when the price of ETH rose to around $2,000, the holdings fell to 1.22 million ETH, the second highest point of the year. Then, before the price fell on August 18, the holdings fell to 890,000 ETH. Currently, the number of holdings is 730,000 ETH.
Compared with the high point at the beginning of the year, holdings decreased by 45%; compared with the second high point of the year, it decreased by 37%; compared with positions before August 18, it decreased by 17%.
Summarize
In the long run, compared with the last bear market, due to the development of its ecosystem, the exchange rate of ETH with BTC has increased overall, from 0.01 to above 0.05. However, judging from the situation in the past year, ETH is in a relatively weak position relative to BTC, and the exchange rate is on a downward trend.
In terms of fundamentals, ETH has been in a deflationary state since the merge upgrade, with an inflation rate of -0.217%. However, in the past two months, on-chain transaction activity has decreased significantly, and Gas revenue has dropped sharply, causing ETH to enter an inflationary state, with an annualized inflation rate of 0.275% in the last 30 days.
In terms of staking data, the ETH pledge rate has continued to rise since the Shanghai upgrade and is currently 25.33%. However, the newly added staking data in recent periods has been significantly lower than the data in the second quarter of this year, and the number of nodes waiting in line for staking has been relatively small recently, hitting the lowest level since the Shanghai upgrade.
In terms of selling, the founder of ETH continued to sell ETH, although the amount was not large, but the confidence in holding the token was adversely affected. In addition, the hacking incident of the FTX exchange caused ETH to be sold to buy BTC, which also brought greater short-term selling pressure to ETH.
In terms of contract data, the holdings of ETH contracts have been on a downward trend this year. Compared with the high point at the beginning of the year, the holdings of ETH contracts have dropped by 45%; compared with the second highest point of the year, it has dropped by 37%; compared with the holdings before August 18, it has dropped by 17%.