ETH Slips Below $2900; What's Behind the Crypto Crash?
Ethereum price started a substantial decline from the $3,000 resistance against the US Dollar. ETH pair is still vulnerable to further declines below the $3000 support level. So, let's explore what's behind this crypto crash.
During the Asian trading session, Ethereum price fell more than 4.5% due to a slew of negative fundamentals driving bearish sentiment in the cryptocurrency market. The day before, ETH/USD closed at $3004.19 after placing a high of $3270.58 and a low of $2989.72. The ETH/USD pair maintained its bearish momentum, falling for the fourth consecutive session due to negative developments in its ecosystem.
Bank of Russia proposes a ban on cryptocurrency use, trade, and mining
In a report titled "Cryptocurrencies: Trends, Risks, Measures," Russia's central bank advocates a ban on a variety of crypto activities. The document was released on Thursday, and the regulator is seeking feedback and suggestions on its contents until March 1.
The Central Bank of Russia (CBR) acknowledges in the paper the rapid growth of the global crypto market in the last year and the $5 billion in crypto transactions made by Russians each year.
At the same time, the bank emphasizes that the increase in value is primarily determined by speculative demand, which is forming a bubble, and that cryptocurrencies have the characteristics of a financial pyramid.
It claims that their spread endangers the stability of Russia's financial system, monetary policy sovereignty, and the well-being of its citizens.
Bank of Russia to work on legal amendments
The Bank of Russia intends to work with the Russian government and parliament on several proposed legal amendments in the coming months to reduce these threats and the risk of illegal activity. These include the imposition of legal ramifications for violations of the prohibition on the use of cryptocurrency as a means of payment for goods and services.
The authorities have frequently referred to cryptocurrencies such as bitcoin and stablecoins as "monetary surrogates" that are illegal under Russian law. It now intends to prohibit their issuance and circulation via digital asset exchanges and peer-to-peer platforms in the Russian economy.
The central bank has also spoken against crypto investments, stating that financial institutions will be barred from investing in cryptocurrencies and crypto-based financial instruments. In addition, cryptocurrency operations must not be facilitated using Russian financial infrastructure or intermediaries. Thus, the latest developments from the Russian central bank are driving sharp dips in cryptocurrencies, including Ethereum.
Can higher gas fees jeopardize Ethereum's position against Solana and Cardano?
According to recent research conducted by JPMorgan analyst Nikolaos Panigirtzoglou, Ethereum could lose its position against its competitors like Solana and Cardano due to the issue of high gas fees. The JPMorgan analyst said that relatively high gas fees on the Ethereum network made it lose users in favor of its competitors, which provide significantly lower transaction fees than Ethereum.
The analyst reported that more and more users were migrating to other blockchains from Ethereum for services like NFT minting. The NFT share volume of Ehtereum has already declined to 80% from 95% in 2021. Therefore, if the loss in the NFT market continued to decline, it could become a bigger problem for Ethereum's valuation. Currently, Ethereum gas fees are the highest in the whole crypto space, and this has been costing its frequent users heavily, which, if persisted for a long time, could harm the potential of the second-largest cryptocurrency. These comments from the JPMorgan analyst contributed to ETH/USD's further loss on Friday.
Bakkt Holdings collaborates with Nexo
A digital asset platform named Bakkt Holdings has announced a partnership with a regulated digital asset intuition, Nexo, to provide custody for cryptocurrency assets such as Bitcoin and Ethereum in the Bakkt Warehouse.
According to Nexo, it acknowledges the need for a trusted partner to bring an extra level of security and credibility to its clients' cryptocurrencies. In addition, Bakkt will help Nexo's customers minimize the risks associated with storing on-chain assets.
Eric Adams's First Paycheque in Cryptocurrency
New York City Mayor Eric Adams has embraced digital assets as he received his first paycheque in BTC and ETH. He had already promised to take the first cheque in cryptocurrencies.
Now that Eric Adams has fulfilled his promise, it has sparked a little positivity in the whole negative market mood. ETH/USD, however, did not follow this news fragment and continued declining for the fifth consecutive session on Friday.
Ethereum Price Chart On The Daily Time Frame | Source: KuCoin
Ethereum Price Analysis - Downward Channel to Support at $2,675
The downward channel provides significant resistance at the 3,400 level; however, the ETH/USD's immediate resistance is at $3000 (the psychological level). Ethereum has formed a bearish candlestick pattern called "Three Black Crows," which typically drives a downtrend.
On the bullish side, a surge in demand can cause Ethereum to slice through $3000 resistance and expose its ETH price towards $3,400 or $3,800. The daily 50-day simple moving average holds near $3800, suggesting a bearish trend in the ETH/USD price.
The leading technical tools such as the RSI(Relative Strength Index) and MACD (Moving Average Convergence and Divergence) are holding below 50 and 0, respectively. It's indicative of a selling trend in Ethereum. On the bearish side, Ethereum's immediate support is held at $2,800, and a breakout of this exposes the ETH/USD price towards $2,670 or $2,400.
Good luck, fellas. Stay tuned for exciting updates!
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