Why is Ethereum (ETH) price down today?

Ether ( ETH ) price is down on Dec. 16 and the pre-FOMC rally to $1,350 was obliterated after Federal Reserve chair Jerome Powell issued hawkish statements following a 0. 50% hike in interest rates.

The Ether sell-off follows a market-wide decline that has sent Ethereum network fees plummeting by 39. 90% in the past 30-days. The total value locked in Ethereum-based smart contracts also decreased by decentralized finance by 4.

49% in 24-hours. Following the FTX exchange scandal, regulators are attempting to fast-track new regulations on the cryptocurrency sector. While some analysts believe Ethereum still possesses multiple bullish catalysts that warrant investing in the asset, on-chain data paints a grim picture of its short-term price prospects.

Here are three reasons why Ether price is down today. Ether price fell as daily fees on the Ethereum network plummeted to $2. 9 million, down from pre-FTX levels of $12.

8 million on June 13. In addition to the decreasing fees, the network registered lower daily active users (DAUs) from a July 26 peak at 961,196 users to only 367,000 DAUs on Dec. 16.

Post-Ethereum merge tokenomics were designed to help Ether become deflationary. However, with gas fees declining and reduced DAUs, Ethereum has turned inflationary by 0. 073% in the past 30-days and added over 7,100 Ether.

According to ultra sound money, since the merge, Ethereum’s network is inflationary by over 1,192 Ether. The total value locked metric is a common way to examine the health and sentiment of a Proof of stake ( PoS ) blockchain like Ethereum. Ethereum’s TVL reached a yearly high at $83.

9 billion on March 31, but since that point, it has shed nearly $60 billion. As of Dec. 15, the network’s TVL stands at $23.

46 billion. The top 10 Ethereum protocols by market cap faced headwinds, with all seeing a drop in TVL and fees over a 7-day period. Notably, MakerDao and Uniswap ( UNI ) saw 5.

82% and 3. 49% respective declines in TVL. On August 9, the Invest in America Act (infrastructure bill) passed Congress and was signed by President Joe Biden .

Members of the blockchain community blasted the bill for what they viewed to be harmful language. The legislation is set to take effect in January 2024. If Ether is deemed a security in the United States, centralized exchanges ( CEX ) may be forced to delist the altcoin for US-based customers.

The security classification could also negatively impact altcoins , DApps and decentralized exchanges ( DEX ) built on Ethereum. The Securities and Exchange Commission (SEC) has yet to decide if Ether passes the Howey test . The announcement by the Commodity Futures Trading Commission (CFTC) which declared Ether a commodity also does not seem to be relieving any investor fears.

Despite the looming Shanghai hard fork, which allows users to unstake Ether in March 2023 , the Ether price is likely to remain under pressure. While investors’ appetite for high-risk assets and their interest in DeFi could continue to diminish, factors like clarity on regulators’ stance on cryptocurrencies and the eventual increase in Ethereum network-based protocols may prove to be a long-term catalyst for price growth. The views, thoughts and opinions expressed here are the authors’ alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

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