As of 14:00 Greenwich Mean Time on November 1, 2023, the eth to usd quote was $1,820 (CoinMarketCap #CMC257), with a 24-hour trading volume of $11 billion, up 3.2% from yesterday. Nevertheless, it went down by 62.7% from the record of $4,878 in November 2021. Price volatility is driven by a number of reasons: After the Shanghai upgrade of Ethereum (in April 2023), the sudden rise in staking unlocks’ count created supply pressure. On-chain statistics showed the validators withdrew ETH at a rate of 1.2 per second (Glassnode #GN2023), but market demand within the same period was partially offset by Layer2 development (e.g., Arbitrum’s transaction volume of more than 2.5 million per day). The price fluctuated by 18% within one week of the upgrade.
Regulatory forces have a direct bearing on eth to usd exchange rate. After the delay of US SEC in approving the Ethereum ETF (case number SEC-2023-00256), the price dropped by 5.3% in 3 hours, but after the EU’s MiCA Act officially designated ETH as a “utility token”, this ignited its 7.8% recovery within 24 hours. The activity of the on-chain whales has intensified the volatility. Addresses holding in excess of 10,000 ETH (equivalent to 34% of circulating supply) have deposited 120,000 ETH (approximating 218 million US dollars) at the support level of 1,800 US dollars. Meanwhile, Coinbase’s ETH/USD order book shows there exists a sell wall of 470 million US dollars at the level of 1,850 US dollars. (Data source:) Santiment #SANAPI).
Macro correlation was high. Before the Federal Reserve’s November rate decision, the US Dollar index (DXY) had risen to 106.9, triggering a 2.1% loss of the total market capitalization of cryptocurrencies. At the same time, the 30-day correlation coefficient between eth to usd and the S&P 500 index rose to 0.65 (the historical average is 0.42). The derivatives market reacted aggressively. Binance ETH/USDT perpetual contract funding rate surged to 0.03% (dominated by long position) and open contract volume exceeded 5 billion US dollars (Coinglass #CGDATA). Leveraged liquidation risk concentrated between 1,750-1,900 US dollars (estimated liquidation value 320 million US dollars).
Technical signals point towards market divergence. The ETH (14th day) RSI is 58.7 (bullish neutral), the Bollinger bands have tightened to $1,780- $1,860, but the 4-hour MACD histogram remains in the negative (-1.2), reflecting short-term pullback pressure. The changes in the competitive landscape in Layer2 have also impacted valuations. The Base Chain’s daily active users since Coinbase’s launch have surpassed 500,000, yet the market value of its ecosystem tokens is only 0.3% of the market value of ETH, without contributing to significantly increasing demand.
On-chain activities correlate with fee fluctuations. The average Gas fee per Ethereum day has dropped to 12 Gwei or around 1.2 US dollars per transaction, but the volume of NFT transactions decreased by 37% on a weekly level (CryptoSlam statistics), which resulted in a 29% year-on-year decline in network revenue (in ETH terms). When it comes to institutional investors, the discount rate of the Grayscale ETHE Trust has declined to -18% (peak -60%), but if the BlackRock ETH Spot ETF application (file No. S7-32-23) is approved, it may bring in another $4.8 billion in assets (Bloomberg forecasting model).
Innovation and compliance risks are twin twins. The SEC action against Coinbase (claiming that it was facilitating ETH transactions as securities business) caused a 22% drop in traffic to the platform’s ETH/USD trading pair for a week, but Visa’s pilot of auto-payment streams over Ethereum (having an average daily settlement test volume of 1.2 million US dollars) provided underlying support. Ecological development stats contradiction: Locked value (TVL) of DeFi has bounced back to 29 billion US dollars (DefiLlama), but the staking percentage has flatlined at 14.3% (growing by merely 1.2% since Shanghai’s upgrade).