The price of Ethereum has been edging closer to that of the Nasdaq, but there’s a catch. Another significant loss in the US stock market might send Ethereum’s native token Ether (ETH) into a similar downward spiral.
Ethereum At Risk of a Worldwide Recession
Mike McGlone, a senior commodity strategist predicts that U.S. stocks to be under pressure because of the continuous energy price rises. Apart from that the potential to trigger a worldwide market slump like that of 2008.
“The crisis in Ukraine and rising petroleum prices make for a strong mix for a worldwide recession,” McGlone said in the paper, adding that leading cryptocurrencies like Bitcoin and Ether might encounter early difficulties as well. During the recent global market crash and Ukraine-Russia crisis, correlations between U.S. stock indexes and prominent cryptocurrencies have only gotten stronger.
Ether’s correlation efficiency with the tech-heavy Nasdaq 100 peaked at 0.93 four days after Russia invaded Ukraine but has since fallen to 0.67. An absolute value of 1 indicates that the two assets move in perfect lockstep. Ether was trading in the center of a range defined by its 100-week exponential moving average (100-day EMA; the red wave in the chart below) between $6,000 and its 30-week EMA (the green wave) near $2,000, according to McGlone. At the interim resistance level of $4,000, he predicts severe selling pressure.
According to the most recent statistics, Ethereum’s market dominance is eroding as competitors like Cardano (ADA), Solana (SOL), Avalanche (AVAX), and Terra gain ground (LUNA).
According to statistics, the proportion of total value locked (TVL) on the Ethereum network has dropped below 55 percent, its lowest level on record, from 97 percent at the start of 2021. New layer-one blockchains, according to Tom Dunleavy, a Messari researcher, are “faster, cheaper, or give a more enticing reward structure” than Ethereum.
Nonetheless, owing to first-mover advantage, he believes it would be difficult to overtake Ethereum and Ethereum Virtual Machine (EVM), a software framework for creating decentralized applications (DApps).
