Ethereum has been under heavy bearish pressure lately with its price dropping and short bets skyrocketing. On Tuesday, ether traded just over $1,600. Yet, it has quickly retraced 2% to $173 during the past 24 hours. This crypto winter has resulted in more aggressive short selling, as well as a reduction in user and developer activity on the Ethereum network.
Diminishing User Engagement and Development Activity
From sentiment moving negatively on Ethereum, to a host of other metrics indicating decreased interest and activity, things aren’t looking great. Daily unique traders on the Ethereum network have plummeted to a 12-month low. This drop is a meaningful indicator of the steep decline in user activity on the platform. Furthermore, weekly code contributions on the Ethereum network have slumped by 67% this year, indicating a slowdown in developer activity. This drop in positive momentum development is worrisome in itself because the Ethereum blockchain is where BlackRock is anchoring its push to dominate the tokenization.
"It's time to face reality," said web3 marketer Stacy Muur. "This isn't the 'efficiency zone,' I'm afraid. This is stagnation."
Surge in Short Bets and Institutional Influence
Options traders are increasing their bearish positions on Ethereum. They have poured $110 million into futures contracts which will accrue profits as long as Ethereum’s price stays under $1,800 this coming April. Additionally, Ethereum short sells are at an all-time high.
"Ethereum short sells are at an all-time high [as] institutions are driving the price down" - Zach Burks
This would indicate that institutional investors have played a role in increasing the downward pressure on Ethereum’s price.
Whale Investors Dump Ethereum
World Liberty the latest to take advantage of Ethereum’s malaise to limits Ethereum Whale dumping. Ethereum’s sale triggered a 55% loss on its own investment. Ethereum’s price is currently about 40% lower than when the Trump family crypto project made its investment in it.
