- The low activity on the network fueled ETH inflation.
- For JP Morgan, the Shanghai update was “disappointing”.
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September is usually a negative month for the prices of financial assets, including cryptocurrencies. 2023 was no exception to the rule and Ether (ETH), the home currency of the Ethereum network, is going through a doubly bad time.
First, Its price (expressed in dollars) reached levels not seen since April of this year in September.. At the time of this publication, each ETH is trading for $1,590, as seen in the CriptoNoticias price calculator.
Y If the price of ETH is measured in Bitcoin (BTC), the situation is even worse. The cryptocurrency is trading at 0.059 BTC, its lowest level since the merger (when mining on Ethereum was abandoned). The chart below, provided by TradingView, shows ETH declining against BTC. It should be noted that the downward trend begins precisely with the merger in September 2022.
On the other hand, September was not only a bearish month for ETH but also an inflationary month. Let’s remember that since the merger, the amount of ETH burned (i.e. destroyed) in each transaction has increased. When activity on the network is high, more ETH is burned than spent and therefore circulation is reduced.
But as can be seen in the chart below from the website ultraschall.money, September’s issuance outnumbered the destruction of ETH and the cryptocurrency’s adoption increased:
Such a situation has a negative impact on the price of the cryptocurrency.. When demand for a financial asset stagnates or declines while supply increases, the price falls.
Analysts at investment firm JP Morgan wrote about the situation Ethereum is in:
The following graphic from the DefiLlama platform shows how the value deposited on the Ethereum network has decreased (this includes tokens, applications, smart contracts, etc.):
The situation possibly begin a reversal process in late 2023 or early 2024. According to many analysts, the likelihood of a spot Bitcoin ETF being approved in the United States is high. If that were to happen, BTC would rise, potentially dragging cryptocurrencies lower. In addition, as CriptoNoticias has detailed, Ethereum has its own fundamentals to grow and increase its value in the medium and long term.