The king of altcoins has been struggling to gain its momentum and get back to its feet. In fact, the Ethereum [ETH] community is beginning to react to the Fed meeting and gross domestic product (GDP) release.
Recent on-chain data suggests that tensions are running high as the crypto relief rally lost momentum. Traders can now see red lights with FUD sentiment running high in crowds.
Earlier, Ethereum investors were solely divisive over the meteoric rise of ETH. It is still an anomaly for a major currency, such as ETH to get a dramatic rise of 58% in well over three weeks.
Despite the hyperinflated returns, traders held a negative bias and were convinced it would lose momentum. Then, from the peak of $1,640, ETH crashed down to $1,400.
‘Wait’ is the word
Well, to assess traders’ enthusiasm, one can have a look at the ‘Average Fees’ for transactions metric.
In the charts, it is pretty evident that competition for block space has been getting less intense over time.
This can mean that market participants aren’t feeling the fear of missing out on low fees. It indicates diminishing courage in the Ethereum community.
Source: Santiment
Another prominent metric is the Ethereum supply on exchanges. The overall supply on exchanges has been increasing on a clockwork scale since early May 2022.
One interesting observation is that during the 58% rally, there was no change in the momentum. This means that investors have been unsure about ETH’s price rise and expected it to fall.
Recently, a sharp rise of 500k ETH (0.5% of the total supply) was added to exchanges suggesting traders’ further loss of faith in Ethereum.
Source: Santiment
On the other hand, to get clarity about the general market picture, one can consider the metric of MakerDAO debt repaid.
Santiment collected data suggested that no new debt has been created in the past three weeks while some repayments took place as of 27 July.
This further shows that market participants are cautious and are preferring to reduce their exposure.
Source: Santiment
With a falling sentiment in the community along with the obvious harsh market conditions, ETH is expected to sink in the short term.
A price rebound may be possible around the release of the Merge. However, in present circumstances, this seems unlikely with the global economy battling inflation.