The Ethereum price is in the red today, because the chances of an Ethereum ETF have decreased for May and sticky inflation in the United States is weighing on the price. Ethereum is struggling to hold support above the $3,000 level.
What’s going on with Ethereum?
Investor sentiment has been further depressed after Susan Collins of the US Federal Reserve suggested that high inflation in America could mean that interest rates will remain at this elevated level for longer.
In her May 8 speech, Collins shared that a slowdown in economic growth may be needed to tame the demand explosion in the economy, which should reduce inflation.
As long as interest rates remain above inflation, there is less incentive for individuals and companies to take out loans for consumption or production; that’s the story.
If this creates fear of a recession among investors, it could drive investors towards US government bonds. After all, they can earn interest there relatively safely, while Ethereum and Bitcoin do not offer guaranteed returns at all. That may explain some of the price drops for Ethereum.
Pressure from lawmakers and bad metrics for the network
The chance of the rapid approval of a Spot Ethereum ETF was also briefly suppressed by the US Securities and Exchange Commission (SEC); the country’s financial regulator.
Recently, the applications from Invesco and Galaxy Digital were postponed until July 2024. Gary Gensler, the chairman of the SEC, also declined to answer questions about Ethereum’s status as a financial asset on May 7 in an interview with CNBC’s Squawk Box on the American television.
Furthermore, Ethereum’s on-chain picture is currently somewhat poor. Activity on the blockchain is decreasing. According to ultrasound.money data, Ethereum’s burn mechanism has hit its lowest level since 2024.
This means that fewer Ethers are thrown into the digital ovens, so that more remain in circulation and that of course also puts pressure on prices. At this rate, Ethereum has an annual inflation of 0.555 percent, while it was previously negative.
Trade €10,000 for free and get a 10 euro bonus
Do you want to enter the crypto world and perhaps buy Ethereum or another crypto? Then grab your chance now with this exclusive offer! Thanks to a special deal between Newsbit and Bitvavo, one of the most accessible and user-friendly crypto exchanges in Europe, our readers receive an exclusive offer.
Create an account with Bitvavo via the button below and receive a welcome gift of 10 euros completely free. And that’s not all – you also don’t pay trading fees on your first 10,000 euros in transactions. Register now!
