Ethereum Price Dips After Network Activity Decreases by 28% Since July

Ethereum's Downward Trend Amidst Reduced Network Activity and Anticipated Fed Meeting

Ethereum, the second-largest cryptocurrency by market capitalization, is currently experiencing a downturn, with its price dropping to a two-week low of $4,150. This decline follows a period of strong inflows and a 28% drop in active addresses since July 30, a trend that has also been reflected in network growth, which tracks new addresses joining Ethereum.

The current exit queue on Ethereum's Proof-of-Stake network stands at 910,461 ETH, worth approximately $3.91 billion. This exit demand is significantly higher than the current demand for new Ethereum staking, which stands at 258,951 ETH (roughly $1.09 billion). Many stakers are looking to unstake their tokens due to profit-taking and the recent spike in Ethereum borrowing rates on Aave, making the previously popular leveraged staking trade less viable.

The recent decline in Ethereum's price and network activity could be a sign of waning investor interest, especially as institutional investors such as BlackRock and Fidelity have been reducing their holdings in Ethereum ETFs in recent days. This shift comes ahead of the Federal Reserve's Jackson Hole meeting scheduled for Friday, where Chairman Jerome Powell is expected to provide clarity on the anticipated September rate cut decision.

Analysts anticipate a "hawkish speech" at the meeting, leading to de-risking, which could further impact the cryptocurrency market. If Ethereum fails to clear the $4,320 resistance, it could continue to move downward toward the $4,020 support zone. A break below this support level might push the price toward $4,000 or even $3,850.

Despite the current downturn, Ethereum's price rally in 2021 has been driven by regulatory approvals, high staking yields (4.5–5.2%), and record CME Ethereum futures activity, contributing to substantial inflows totaling over $1.83 billion. These inflows, along with heavy investments from institutional players like BlackRock and Fidelity, have significantly influenced the Ethereum market.

In conclusion, Ethereum's current downturn could be a result of reduced network activity, profit-taking, and waning investor interest ahead of the Federal Reserve's meeting. As the market awaits the upcoming event, it remains to be seen how the cryptocurrency will fare in the coming days.