The native token of Ethereum’s blockchain is trading near $1,758 at press time, down 6% on a 24-hour basis. The cryptocurrency touched a three-week low of $1,721 early today, having peaked above $4,000 in May, according to CoinDesk 20 data. Other prominent altcoins like XRP, cardano, uniswap, chainlink, and stellar are nursing declines around 10%. Bitcoin, the crypto market leader, is down 5% at $29,700.
“We’re seeing risk-off moves in equity, FX, and commodities,” said Edmond G., head of trading at B2C2. “Crypto isn’t immune from traditional market sentiment and is also caught up in the legs lower. So far, we’re seeing very little movement [higher in ETH] while heading into the Ethereum Improvement Proposals (EIP) 1559 upgrade proposed [for] Aug. 4.”
Global equity markets faced selling pressure on Monday, while the dollar rose on concerns a rebound in coronavirus cases would derail the global economy. As a result, bitcoin and crypto, being at the far end of the risk curve, are suffering losses.
According to some analysts, Ethereum’s impending upgrade aims to burn part of the transaction fees and make ether less inflationary.
“The ether supply burn would be significant even with the growth of the layer 2 scaling solutions,” Noelle Acheson, head of markets insights at Genesis Trading, said. ” Whatever amount ends up being burned, it will be more than what’s currently being burned, so the upgrade does reduce the supply growth.”
Acheson said that while the upgrade wouldn’t directly reduce ether transaction fees, a sour spot for DeFi protocols and traders, it will “make them more transparent and manageable.”