Total market capitalization for cryptocurrencies dipped by 10% over the past week and 4.15% in 24 hours. Consequently, ETH suffered the wrath of decline. Usually, FUD (Fear, Uncertainty, and Doubt) is a part of a rally. But, curiously, Ethereum witnessed FUD in its bear market this time.
Well, ETH seen a 5% price correction at press time as it was trading just above the $3,000 mark. The “buy the dip” sentiment echoed; it seems that FUD played a major role in it. That said, ETH is certainly testing the ability of HODLers in the current market structure.
What’s the current market structure like?
According to market data platform Santiment, there’s a lot of bearishness in the crypto market. This took place as a result of the falling market caps.
Amidst all this bearish chaos, there is one metric that has given a positive signal. Well, ETH weighted sentiment has fallen from -1.33 to -0.45. This showed how much confidence investors had in Ethereum, even in the bear market, thanks to the highly anticipated “merger”.
The merge would help Ethereum transition from a Proof of Work (PoW) to a Proof of Stake (PoS) consensus mechanism. Some factors, such as Triple Halvening ETH, staking APR, ETH (Un)Lock, would change ETH supply and demand dynamics after the Merge.
Additionally, the combination of EIP-1559 and the corresponding move towards a proof-of-stake model would represent a “triple halving” for Ethereum.
In this regard, it is also to be noted that in terms of staking, there was 11.4M ETH staked, earning 4.6% APR. This ETH-denominated yield came from the staking rewards. PoS stakers would receive the unburnt fee revenue that now goes to miners. It would increase the staking APR 2x or even more.
When the APR increases, it will give way to more ETH being staked as it becomes an attractive alternative to other revenue opportunities in DeFi. More ETH being staked would equal less supply.
Well, according to data from ultrasound.money, the number one smart contract network hit more than two million in ETH burned.
That’s almost six ETH/min. The supply of ETH would decrease by 2.2% every year at this burn rate. This, according to a pseudonymous DeFi educator, ‘Korai‘ would cause the price of ETH to skyrocket.
