Ethereum’s price takes a beating as over $30 billion exits DeFi protocols

Posted: 6 June 2022 3:42 am
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The total capital locked across all Ethereum smart contracts has slipped from $100B to $70B over the last 30 days.

  • While monetary inflows into Ethereum have recently dropped quite substantially, investors have continued to pour funds into rival networks such as Solana and Cardano.
  • Ethereum balances across all exchanges have increased by 550,459 ETH since May.
  • ETH’s total cap currently stands at $212B, with the altcoin possessing a crypto market share of 17%.

Over the last six months, Ethereum (ETH) has dropped more than 50% of its value, with the altcoin struggling to break past the $2,000 psychological threshold. ETH is currently trading at $1,750.

Ethereum’s lackluster price action continues to be compounded by massive sell-offs. Based on year-to-date (YTD) data, investors withdrew a total of $250M from various ETH-centric investment offerings. This wasn’t the case for other cryptocurrencies, with Bitcoin, Solana and Cardano witnessing year-to-date pour-ins of $369M, $104M and $9M, respectively.

ETH’s continued success hinges on a potential decentralized finance (DeFi) boom, with the asset hosting a majority of all decentralized apps (dApps) operating within this space. As of June 5, the Ethereum network lays claim to approximately 65% of the total capital locked within the DeFi ecosystem. This metric, even though seemingly quite large, has been on the decline. Since May 9, the capital locked across all ETH-based dApps has dropped from $100B to $69B.

As the Federal Reserve continues to tighten its monetary policies, analysts like Ilan Solot, partner at multi-strategy hedge fund Tagus Capital, believe that things may not look any better for ETH anytime soon. Ilan added: “The world is in recession, and people need to pay $4.5 per gallon of gas. They’ll have less to invest in DeFi or spend on blockchain games.”

How to buy Ethereum

Where is ETH headed?

Traders are not too bullish on ETH’s prospects, with the altcoin exhibiting the potential to drop as low as $1,350 in the near term. The altcoin is also witnessing growing balances on exchanges globally, suggesting possible mass liquidations. Since the start of May, ETH reserves across various trading platforms have grown by 550,459 ETH (worth approximately $930M).

Ether has continued to fluctuate within a horizontal price range of $1,700–$2,200 for a month now, forming what is known as a “descending triangle.” It’s a bearish indicator that arises during times of a downtrend. It will be interesting to see whether the altcoin can break out of its ongoing rut anytime soon.

Disclosure: The author owns a range of cryptocurrencies at the time of writing.

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