Ethereum, the Layer 1 blockchain for most of the DeFi protocols available in the market, has seen declines in both metrics and price since the beginning of the month.
According to CoinMarketCapEthereum price fell 6% in the weekly time frame and traded at $1,554.
Nansen.aion the other hand, has noted several key metrics that investors should pay attention to as Shanghai’s Ethereum upgrade moves closer to the frame.
In the meantime, DeFi has taken a hit from the recent volatility in the market. Total Locked Value (TVL) of DeFi is gone down by one percent, a figure that may not be too alarming, but could still generate some negative energy for investors.
Markets down, investors dragged
According to a recent wire created by the company, Ethereum is showing signs that both retail and institutional investors have a bearish attitude that is contributing to the general market depression we are seeing now.
The simplest explanation is that traders are more efficient at selling on the highs than buying on the dip. “Dip Buyers,” a category in Nansen’s report, had only 23 traders who fit into this category.
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Sellers are also selling more ETH to the open market. The Top Seller segment of the report also shows that they have sold over 335,000 ETH. Investors who have made profits of $40,000 also avoid ETH with a 50% drop in the metric. This can be attributed to external events that heavily affected the markets, namely the collapse of Terra.
In the short to medium term, things don’t look good for Ethereum either. CoinGlass facts shows short sellers outperforming longs by a percentage that contributes to the overall marker dip as of the time of going to press.
Macro misery works hand in hand with the bears
Recent macroeconomic news is stirring the broader market as US Federal Reserve Chairman Jerome Powell announced that the Fed may expect more rate hikes in the coming months. This came after of February Year-over-year consumer price index report showing only a 0.1% drop in CPI from 6.5% to 6.4%.
Before the release of the CPI data, analysts were bullish and predicted a YoY CPI OF 6.2%. This prompted the financial markets to start the day low as the bears moved in, dragging the crypto market as well.
All of this comes before the release of Ethereum’s Shanghai upgrade. This could be bad news for ETH as it could be a repeat of the Merge event for the altcoin.
Crypto total market cap at $988 billion on the daily chart | Chart: TradingView.com
The Merge was a hyped event where Ethereum went from proof-of-work (PoW) to proof-of-stake (PoS), which it was hoped would bring some returns to investors. However, the market saw it significant losses that overshadowed the event.
If the Shanghai upgrade follows in the footsteps of the merger, investors could face gains or losses as the macroeconomic situation improves or not.
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