65,000 Ethereum sales were made on Uniswap, one of the popular Decentralized Exchanges (DEX). After that, the ETH price started to decline. The massive sell-off negatively impacted the Ether price, triggering bearish sentiment among the altcoin’s holders.
Ethereum mining becomes unprofitable for the first time since 2020
Ethereum mining has become unprofitable for many users connecting to the traditional energy grid for the first time since 2020. As energy prices skyrocketed, Ethereum prices dropped to $1,188. Rising electricity costs in some US states are higher than the Ethereum reward from GPU mining. Therefore, miners paying more than $0.245 per kWh are currently incurring losses. The profitability of mining Ether with GPUs has declined steadily. At this point, it has become less costly to buy the altcoin instead of spending electricity to mine it.
ETH mining profitability ETH price may see these levels
According to Edward Novogratz, CEO of Galaxy Investment Partners, Ethereum price is 1,000 dollar is likely. He also predicts that the leading altcoin asset will defend this level in the current downtrend. As Novogratz commented at a Morgan Stanley conference, he is of the opinion that Ethereum is closer to the “bottom” than US equities. The famous investor’s words were recorded:
“I don’t think it’s a good idea to raise capital until we really see the Fed floundering, even if the Fed stops raising interest rates, or even lowers them.”
What threat does Lido stETH dominance pose to Ether price?
Ethereum staking protocol Lido dominates the staked ETH space. It also puts Ethereum at risk of a centralized attack after Merge, where it will become a PoS network. Danny Ryan, a researcher at the Ethereum Foundation, put forward this thesis in an article titled “The risks of Lido staking dominance.” Accordingly, Ryan proposes to set a threshold limit for all staked Ether. It also warns investors that they should limit their connection to the protocol due to the possibility of cyber-attack:
“Lido, with 1/3 dominance, is a centralization attack on PoS. We are bad at assessing attack risk, but staking at these thresholds in Lido involves a lot.”
According to data from Dune Analytics, Lido holds 90.8% of the Ether staked in the ETH2 smart contract. It also means that 4 million ETH is in Lido for staking. The team at Lido argues that it uses 21 validators and that centralized entities do not provide such transparency. Nansen CEO Alex Svanevik said:
“It is too early to impose self-restraint on the Lido, if any. You can easily imagine a more centralized or more malevolent entity that is not self-limiting by crossing the Lido.” Depeg on
stETH could prevent Ethereum price recovery
Lido’s stETH is a derivative token representing staked ether. stETH lost its constant to ETH this week. Each stETH represents one staked Ethereum token, as we have reported as Kriptokoin.com. In addition, these tokens can be used in the future for 1 ETH. The dramatic depeg after the merge upgrade led to a drop in the stETH price. Accordingly, the token was traded at around 97% of the Ethereum price in May 2022. According to data from Dune Analytics, stETH was trading just over 93% of Ethereum price on Monday, June 13. The crypto community fears that Terra’s UST has recently collapsed. Also, the similarities between stETH and Terra’s UST cause the market to hesitate. Lido responded to this narrative on Twitter, explaining to the community:
“The exchange rate between stETH:ETH does not represent the underlying support for your staked ETH. Rather, it reflects a fluctuating secondary market price. The market naturally finds a reasonable price for stETH as some participants need to find liquidity.”
Why ETH price dropped on Uniswap
On Monday, June 13, Ethereum price on Uniswap dropped to $950 in several pairs. Meanwhile, on other cryptocurrency exchanges, Ether was trading above $1,100. The decline in the Uniswap exchange was caused by a whale selling 65,000 ETH. Accordingly, the sale caused a major bottleneck in the altcoin with $100 million in liquidity. This event kept the spot price of Ether 20% lower than other cryptocurrency exchanges. Whale was forced to sell large amounts of ETH in an over-leveraged position due to the risk of liquidation. Since this is an extremely leveraged position, the whale chose to reduce its risk. Thus, it has sold over 65,000 Ether on Uniswap and its liquidation price has dropped. The movements of the whales were as follows:
- 80 million DAI used ETH to borrow.
- Whale financed the loan with 96,700 ETH on Maker DAO (MAKER/USD).
- A position of 130,000 ETH has been opened.
Ethereum price lost 20%
Analysts evaluated the Ethereum price trend. Accordingly, experts predict that the altcoin is in the bearish zone. There is an initial resistance near the 23.6% Fib retracement level of $1,185. Two key resistances are near the $1,280 and $1,300 levels. Therefore, analysts have identified a major bearish trend line on the Ethereum price chart. If the altcoin continues its downtrend, a drop in Ethereum price to $1,073 is possible. Breaking the support zone below $1,000 will allow Ethereum price to see $950.
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