Ethereum’s latest price decrease was fueled by increased altcoin inflows to cryptocurrency exchanges. Experts attribute the drop in Ethereum’s price to direct transfers from the NFT marketplace OpenSea.
OpenSea Transactions Volume is Dangerous for Ethereum
Etherscan data shows that OpenSea has unloaded thousands of ETH onto the market over the past few weeks. Statistics show that NFT creators have also profited from the platform. OpenSea’s NFT trading volume continued to rise in January.
OpenSea has experienced extraordinary NFT sales since the beginning of 2022. Dune Analytics claims that OpenSea has a monthly sales volume of $4.5 billion in NFTs. The current monthly NFT sales on OpenSea exceed their $3.5 billion record and are expected to increase.
In the last 2 weeks, Ethereum has seen a steady increase in exits. 21,000 Ethereum were directly transferred from OpenSea’s wallet to Coinbase.
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OpenSea direct transfer royalties increase as NFTs are sold more. Coinbase may see an increase in Ethereum transactions due to the rapid rise of NFTs.
OpenSea royalties paid out an additional 35,300 Ethereum to NFT issuesrs. Colin Wu, an analyst in crypto and a Chinese journalist from China, claims the rise in selling pressure was due to Ethereum inflows via Coinbase.
Historically, a surge in selling pressure causes the altcoin’s price to fall. Colin Wu tweeted:
“OpenSea and NFT issuers may be one of the pressures for ETH to crash. In the past two weeks, the amount of ETH transferred directly from OpenSea Wallet to Coinbase reached 21,000, and the amount of ETH transferred to royalty distributors reached 35,300.”
Analysts noticed that Ethereum’s net outflow in 2021 was quite large. The last month has seen a significant increase in the net flow to Ethereum.
Inflation in ETH/USD to $2,000. TradingView
IAmCryptoWolf, a pseudonymous cryptocurrency analyst, assessed the Ethereum price trend and forecasted that a bounce in the altcoin’s price around $2,300 would act as strong barrier.
Working with 78.6fib and monthly 21EMA, horizontal daily support 2.2-2.3k.
A bounce will provide strong resistance since we have lost key support of 3k. The daily DMA50 resistances will be curving downward in this same area, as well as the WMA50- and WEMA21 resistances. pic.twitter.com/ngR2YsCzqC
— Wolf 🐺 (@IamCryptoWolf) January 23, 2022
Ethereum Net Position Change All exchanges. Glassnode
OpenSea may not be the main reason behind the decrease in price of ETH. Coinmarketcap data shows that ether has fallen more than 35% over the past year. The value of ETH fell below $3,000. Over $746 was deducted in the last 14 days. ETH currently trades at $2,407, a -33.71% drop over the past 24 hours.
There are other factors that can trigger price falls
There are many factors that have led to crypto market turmoil, such as a large market selloff due to an abrupt policy change by the US Federal Reserve Bank. Consider the changing Russian policy toward cryptocurrency.
However, market participants remain positive about Ether long-term. These hopes are being fueled by several network upgrades planned for this year. For starters, the next stage of Ethereum’s journey to becoming a proof-of-stake (PoS) blockchain is planned for this year. According to several forecasts, the merger could occur in the first half 2022. This improvement will increase the Ethereum network’s scalability and greatly contribute to making Ether issuance deflationary.
It will increase adoption, which in turn, will drive up Ethereum’s price.
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Featured image from Shutterstock. Charts by Glassnode and TradingView| Charts by Glassnode, and TradingView