Higher altcoin inflows to cryptocurrency exchanges caused the current drop in Ethereum’s price. According to experts, the dip in Ethereum’s price is attributed to direct transfers from the NFT marketplace OpenSea.
The Transaction Volume of OpenSea Is Dangerous For Ethereum
According to Etherscan statistics, OpenSea has been dumping thousands of ETH on the market in recent weeks. According to the statistics, NFT creators on the platform have also profited. In January, the volume of NFT trading on OpenSea continued to rise.
OpenSea, the largest NFT marketplace, has had remarkable NFT sales since the beginning of 2022. Monthly NFT sales on OpenSea now top $4.5 billion, according to Dune Analytics. This amount exceeds their previous monthly sales record of $3.5 billion and is anticipated to increase further.
Over the last two weeks, the volume of Ethereum departing has gradually increased. 21,000 Ethereum were sent directly from OpenSea’s wallet to Coinbase.
Royalties and direct transfers from OpenSea are increasing in tandem with the sale of NFTs. The rapid expansion of the NFT industry may increase Ethereum inflows to exchanges like Coinbase.
An additional 35,300 Ethereum were distributed to NFT issuers as royalties from OpenSea. Colin Wu, a Chinese writer and crypto specialist, claims that the spike in selling pressure is due to a jump of Ethereum inflows from OpenSea to Coinbase.
Historically, an increase in selling pressure causes the price of an altcoin to plummet. Colin Wu posted on Twitter:
“One of the pushes on ETH to crash may come from OpenSea and NFT issuers.” The amount of ETH moved directly from OpenSea Wallet to Coinbase in the last two weeks reached 21,000, and the amount of ETH transferred to royalty distributors reached 35,300.”
Analysts have seen a rather big net outflow for Ethereum in 2021. During the recent month, the net inflow of Ethereum has surged dramatically.
A pseudonymous cryptocurrency analyst, IAmCryptoWolf, examined the Ethereum price trend and predicted that a bounce in the altcoin’s price around $2,300 would operate as a powerful barrier.
https://twitter.com/IamCryptoWolf/status/1485372738625810432?ref_src=twsrc%5Etfw%7Ctwcamp%5Etweetembed%7Ctwterm%5E1485372738625810432%7Ctwgr%5E%7Ctwcon%5Es1_&ref_url=https%3A%2F%2Fwww.newsbtc.com%2Fnews%2Fethereum%2Fopensea-trading-volume-may-force-ethereum-price-crash-expert-says%2F
However, OpenSea is not the primary cause of the ETH price decline. Ether is down more than 35% year to date, according to Coinmarketcap data. Over $746 has been removed from the value of ETH in the last 14 days as it has dropped below $3,000. ETH is currently trading at $2,407, down -3.71 percent in the last 24 hours.
Other Factors That Could Cause a Price Drop
Several factors have contributed to the crypto market crisis, including a broad market selloff in response to the US Federal Reserve Bank’s policy shift. Among the main aspects to consider is Russia’s shifting official orientation towards cryptocurrency.
On the other hand, market participants continue to be bullish about Ethereum in the long run. Several changes planned for this year by the network are driving these expectations. To begin, the next stage of Ethereum’s path towards becoming a proof-of-stake (PoS) blockchain is scheduled for this year. According to several projections, the merger will take place in the first half of 2022. This enhancement will improve the Ethereum network’s scalability and significantly contribute to the deflationary nature of Ether issuance.
As a result, it will boost adoption and, in the long term, drive up Ethereum’s price.
