#Ethereum Price Rejects $1700 —Was February’s NFT Boom Just a Blur?
On the back of soaring NFT activity, Ethereum tests $1,700. On-chain metrics show the recent ETH price downswing could dip further in March 2023.
Ethereum (ETH) was lauded after EIP-1559 successfully passed, enabling a mechanism for network transaction gas fees paid to be burned. It marked the start of the disinflationary era for the second-largest cryptocurrency by market cap.
ETH Burn Rate Cools off as NFT Activity Declines
According to data from the block explorer platform Etherscan, ETH’s daily burn volume reached a year-to-date peak of 5,580 ETH on Feb. 14.
Ethereum (ETH) burn rate, March 2023. Source: Etherscan
Since Feb. 14, the number of ETH burned has declined by more than 50% to reach 2,700 ETH on March 5. When more ETH is burned, it increases scarcity, ultimately pushing the price.
Consequently, the burn rate decline has likely considerably impacted the net supply of ETH in the past weeks. And unless the trend is reversed, it could push Ethereum into the bearish zone.
NFT trade volume is an indicator of a fundamental decline in Ethereum network value, leading to a potential price slump.
On-chain data by blockchain analytics firm Santiment shows NFT trading activity on the Ethereum network has slowed since mid-February.
Ethereum (ETH) Price vs. NFT Trade Volume, March 2023. Source: Santiment
The chart above shows that Santiment recorded $2.34 million in NFT trades across the Ethereum network on Feb. 6. But the NFT trades volume has since reduced to around $730,000 as of March 5.
This can pose a major concern for Ethereum holders because NFTs are a significant source of value locked, utility, and fees generated on the pioneer smart contract network.
Will ETH Drop Below $1,500 in March 2023?
The decline in Ethereum network value has raised significant bearish concerns among ETH holders in the past week. Likewise, the Global In/Out Of Money (GIOMAP) data compiled by blockchain forensics firm IntoTheBlock indicates that ETH could slip below $1,500.
Ethereum (ETH) GIOMAP data, March 2023. Source: IntoTheBlock
Having failed to break and hold above the $1,700 multiple times, Ethereum holders can now expect a downswing towards $1,360, where a cluster of 6.25 million addresses that bought 13 million ETH tokens can offer considerable support. Failure to hold this level could see ETH slide further to reach $1,180, where another 7.3 million addresses that bought 11.14 million tokens can ease the slump.
In contrast, if ETH can break the resistance of 7.5 million addresses that bought about 26 million tokens around $1,800, it can head on a price rally toward $2,600.
In summary, the decline of NFT trading activity and the slowing burn rate in ETH gas emissions have contributed to its recent price slump. Market analysts will also pay close attention to the postponed Shanghai Upgrade as they position for a potentially bearish March 2023 performance.