Ethereum’s recovery rally ended quite unexpectedly as the price of the second biggest cryptocurrency on the market dropped massively after the opening of the Asian markets.
As the chart shared by Alex Kruger suggests, we saw a relatively large selling volume on the market as Asian bears started actively selling their ETH holdings, pushing the liquidation volume on the Ethereum market to almost $100 million.
Asia woke up and chose to run everybody’s stops. That’s a 10% 1-day round-trip for ETH. pic.twitter.com/VgLxMSfWzf
— Alex Krüger (@krugermacro) July 25, 2022
Within a one day, Ether lost almost 10% of its value, which marks the third unsuccessful attempt by the cryptocurrency to break the $1,600 threshold. While Ether managed to gain a foothold above the 50-day moving average, the fate of the recovery rally is questionable, as ETH cannot reach new highs.
Some traders believe what we see on the cryptocurrency market today is a bear trap that will become a catalyst for another reversal, which is going to push the price of the first cryptocurrency to new lows.
Deflation is not enough for Ethereum
With the upcoming Merge update, Ethereum will finally become deflationary as the net issuance of assets will reach -4.5%. Unfortunately, the fact that the supply of Ether will start gradually decreasing in the future is not enough to push the price of the asset to a new ATH.
As the market performance of ETH suggests, investors are not willing to acquire more coins because of the decreasing supply. The main driver for Buterin’s creation is usage and adoption, which only comes with the blossoming of various use cases based on Ethereum.
At press time, Ethereum is struggling and consolidating at around $1,525, losing more than 5% of its value in the last 24 hours and 10% from yesterday’s high.