Declining Ethereum Stablecoin Volume: Will This Affect Ethereum Prices?

  • The volume of stablecoins on Ethereum has fallen to $40 billion, indicating the possibility of driving the cryptocurrency into a bearish phase.
  • The long/short MVRV spread, combined with holder sentiment, showed that the price of ETH could rise.

Stablecoin volume on Ethereum [ETH] The value of blockchain has fallen from $84 billion to $40 billion, according to data from CryptoQuant. When the volume of stablecoins increases, it means that the demand for tokens on the blockchain may increase.

Also, when this happens, it boosts the ecosystem’s native cryptocurrency. For Ethereum, the decline in volume indicates that most ERC-20 tokens have performed poorly.

ETH holders do not believe in bears

ERC-20 tokens refer to tokens created using the Ethereum blockchain. Historically, if the volume of a stablecoin drops below $30 billion, ETH falls into a bear market. So the danger was there.

Ethereum is flashing a bearish signal

Source: Cryptoquant

At press time, Ethereum’s price stood at $3,517, representing a 4.18% decline in the past seven days. While there were expectations that the price would return to the $4,000 level, that did not happen for weeks.

Besides, AMBCrypto looked at LTH-NUPL. LTH-NUPL means Long Term Holder – Net Unrealized Gain/Loss. This measure evaluates the long-term behavior of shareholders.

Typically, the metric takes into account UTXOs with a shelf life of at least 155 days. According to Glassnode, Ethereum’s LTH-NUPL was in the belief zone (green).

This indicates that the token holders are convinced That the price may rise.

If this conviction remains the same in the coming weeks, Ethereum may not enter a cycle. Alternatively, the price of the token, supported by demand, could be looking to reach a new all-time high.

Ethereum holders show their faith in ETH

Source: Glassnode

Will higher volatility cause the price to rise?

The long/short spread between market cap and realized value (MVRV) is another metric that can tell if ETH is in a bear zone or not.

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When the gauge reading falls into negative territory, it means that the cryptocurrency may have fallen into a bear market.

But as long as the metric remains positive, the cryptocurrency is in a bullish phase. At the time of writing, AMBCrypto noted that the long/short MVRV spread was 35.50%.

While this was a decline from last month’s reading, it was a sign of ETH’s presence Did not give up To bear territory. However, one cannot deny that this means that the price of ETH may decline.

But if that happens, the value of the cryptocurrency is unlikely to fall below $3,000. If this remains the case, ETH may have a chance to retest $4,000 and beyond.

At the same time, one-day volatility began to increase. Volatility measures how quickly a price moves in different directions. When volatility increases with buying pressure, the price can jump to incredible numbers.

Ethereum price is not in a bear market

Source: Santiment

Read about Ethereum [ETH] Price forecasts 2024-2025

On the other hand, high volatility will lead to selling pressure to correct. As for ETH, it is still uncertain where the price will go next.

However, it seemed almost certain that holders might not succumb to bearish demand pushing the price lower than expected.

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