- Total costs for Ethereum fell to their lowest level in six months on Sunday.
- ETH’s Open Interest also plummeted to its year-to-date low on August 23.
The total daily fees paid by users to complete transactions on Layer 1 (L1) blockchain Ethereum [ETH] fell to a six-month low of 1,719 ETH ($2.8 million) on August 27, according to data from on-chain analytics platform IntoTheBlock.
Total daily costs on Ethereum hit a six-month low on Sunday, registering at 1.72k $ETH. Could this be a sign of investor caution in the current market landscape?
Dive deeper into the data ????https://t.co/af9A4ahkBq pic.twitter.com/XiMapAQvx2— IntoTheBlock (@intotheblock) August 28, 2023
Realistic or not, here is the market cap of ETH in BTC terms
This represented a 97% drop from this year’s all-time high of 84,000 ETH recorded on May 1. Within the same period, the average daily fee per transaction fell by 70%, according to data from IntoTheBlock.
Source: IntoTheBlock
The decrease in network costs on the leading L1 is due to a drop in network usage and the growth in adoption of Layer 2 (L2) scaling solutions in recent months.
After rising to a year-to-date high of $13.42 billion on March 14, the daily transaction volume on Ethereum has since fallen by 78%.
Source: IntoTheBlock
As expected, the steady decline in network charges resulted in a drop in network revenue. According to data obtained from Token terminalEthereum network revenue is down 22% in the last 30 days.
ETH futures contracts are at their lowest level this year
The coin Bitcoin will be launched on August 17 [BTC], suffered its biggest single-day sell-off of the year, briefly trading below the $25,000 price mark. Due to its statistically significant positive correlation with the coin, ETH has since experienced an exodus of liquidity from its futures market.
According to data from Mint glassETH’s Open Interest has since fallen downwards. At the time of writing, it was set at $4.69 billion, down 29% since deleveraging.
On Aug. 23, the liquidity flush caused the alt’s Open Interest to hit a year-to-date low of $4.67 billion.
Source: Coinglass
This kind of significant decrease in an asset’s Open Interest is generally interpreted as a negative sign for the underlying asset. It means investors are closing positions in their numbers as market sentiment remains overwhelmingly bearish.
While the price of ETH continued to hover at $1600, the price continued to trade within a narrow range at the time of writing, leaving many investors unsure about the next price direction. While waiting for a catalyst, many have decided to hedge against further risk by exiting their positions.
How much are 1,10,100 ETHs worth today?
Investors who have not closed their ETH positions since deleveraging are betting against the price of ETH. This is evidenced by the negative funding rates on crypto exchanges since August 17, according to Coinglass.
This indicated that there has been a significant amount of short-selling pressure on ETH, which could contribute to further price declines.
Source: Coinglass