The post Ethereum Crash Alert: Will Low Fees and High Inflation Trigger a 91% Price Drop? appeared first on Coinpedia Fintech News
Ethereum, the second-largest cryptocurrency by market capitalization, is facing a tough time. According to CryptoQuant crypto trader EgyHash, Ethereum’s network activity has been slowing down, pushing the asset into a difficult position. Compared to Bitcoin, Ethereum’s performance has dropped to levels not seen since 2020, raising concerns about its price on the brink of a 91% crash.
Dropping Network Activity & Fee
As per EgyHash, Ethereum’s troubles are mainly caused by declining network activity. The number of active addresses has been dropping steadily since the start of the year. This reduction in engagement has led to lower transaction fees, which in turn affect Ethereum’s overall value.
According to on-chain data, both the average fee per transaction and block have hit all-time lows. This decline has made Ethereum less lucrative for validators, further affecting its ecosystem.
Adding to the concerns, Santiment data reveals that Ethereum whales have dumped 760,000 ETH, worth about $1.42 billion, in just two weeks.
Whale activity has also plummeted by 63.8% in the last five weeks, signaling major trouble. If this trend continues, Ethereum could face a massive sell-off and more price pain ahead
Impact of the Dencun Upgrade
Ethereum’s deflationary mechanism, which burns transaction fees to control inflation, has weakened due to low network activity. Since the Dencun upgrade, the burn rate has hit its lowest level since Ethereum transitioned to proof-of-stake, increasing supply and adding inflationary pressure.
According to EgyHash, this situation is making it difficult for Ethereum to maintain its value. For a recovery, network activity and transaction fees must rise. However, if inflation continues to exceed demand, Ethereum’s price could remain under pressure.
Ethereum’s 91% Crash Warning
Adding bearish concerns, crypto analyst Ali Martinez has warned of a potential Ethereum crash against Bitcoin. As per Martinez, Ethereum could crash by 91% based on the ETH/BTC chart.
He points out that when flipped upside down, the chart shows a double-top pattern—a classic bearish signal that often leads to a sharp fall. “If this pattern plays out, ETH/BTC could tumble to 0.0020 BTC,”.
Currently, Ethereum is trading at 0.02153 BTC ($1,766), meaning such a drop would be a devastating crash for the asset.
Meanwhile, technical analysis suggests that if Ethereum holds above the $1,800 support level and begins a recovery, similar to Bitcoin, it could push past the $1,900 and $1,950 resistance zones.
Never Miss a Beat in the Crypto World!
Stay ahead with breaking news, expert analysis, and real-time updates on the latest trends in Bitcoin, altcoins, DeFi, NFTs, and more.
FAQs
ETH’s price is dropping due to low network activity, reduced transaction fees, whale sell-offs, and inflationary pressure from the Dencun upgrade.
Dencun lowered Ethereum’s burn rate, increasing supply and inflationary pressure, which could further weaken ETH’s price stability.
