3 reasons why Ethereum price could struggle at the $1.9K level
Since May 12, Ether (ETH) price has been struggling to sustain its $1,800 support level as investors face pressures from a worsening crypto regulatory environment and the Ethereum network’s high gas fees. Also negatively impacting Ether’s price are 3 indicators signaling reduced demand for its decentralized applications (DApps) and a lack of leverage buying demand from professional traders.
According to court documents filed on May 15, the U.S. Securities Exchange Commission (SEC) has given a formal response in court in relation to Coinbase’s petition for clear crypto regulation. The SEC stated that any rulemaking may take years and that enforcement actions will continue in the meantime.
On May 16, the Economic and Financial Affairs Council of the European Union — comprising finance ministers of all member states — approved the highly-anticipated Markets in Crypto-Assets (MiCA) regulation, which will come into effect by mid-2024.
Some argue that the MiCA facilitates businesses growth in the region, while others focus on the privacy risks for personal users’ data, and the risks imposed for non-custodial solutions, including decentralized finance (DeFi) applications.
The drop in DApp deposits is concerning
The Ethereum network is experiencing problems caused by surging gas fees, the cost associated with transactions, including those performed by smart contracts. For the past 4 weeks, the average transaction fee has stood above $9, which severely limited the demand for DApp usage.
Total deposits on the Ethereum network in Ether terms plunged to their lowest levels since August 2020. Such an analysis excludes the effects of native Ethereum staking, which recently started to allow withdrawals.
According to DefiLlama data,
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