Ether faces bearish pressure due to lack of institutional demand and regulatory uncertainty

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20th June 2024 – (Hong Kong) Ether, the second-largest cryptocurrency, has been experiencing downward pressure since June 7 when it lost the crucial support level of $3,800. Despite positive developments, including regulatory clearance for Ethereum, its price remained below $3,600 on June 19, showing no significant weekly change.

Analysts point to the lack of institutional demand for cryptocurrencies as a primary reason for the bearish momentum. The Ethereum ecosystem’s regulatory uncertainty is also seen as a contributing factor.

Noelle Acheson, author of the ‘Crypto is Macro Now’ newsletter, expressed surprise at the lack of positive momentum for Ether following Consensys’ victory over the regulator. She raises concerns about potential regulatory issues related to staking that might be deterring investor interest.

Consensys, a prominent Ethereum ecosystem developer, recently announced the conclusion of the U.S. Securities and Exchange Commission’s investigation into Ethereum’s status as a security and the company’s involvement in ETH sales. Despite this regulatory clearance, Ether’s downturn coincided with Bitcoin facing rejection near $72,000 on 7th June.

Investors have grown concerned about the U.S.’s fiscal health, driven by high interest rates and worsening economic indicators. While cryptocurrencies may benefit from deteriorating macroeconomic conditions in the long term, history shows that investors tend to withdraw from risk assets when a recession looms.

Ether also faces its own challenges, such as persistently high network processing fees and competition from other platforms like Solana, BNB Chain, and THORChain, resulting in a shift of decentralized application volume.