Crypto-focused behavior analytics startup Santiment claims market speculators are moving on from Ethereum ($ETH) to other layer one (L1) blockchains that offer a higher rate of return on investment.
In a new insights blog post titled “ETH – Where has all the magic gone?”, which was published on September 22, Santiment says that exchanges are experiencing an influx of $ETH, indicating that investors are moving to sell their $ETH holdings.
Santiment’s recent insights report comes in the wake of Bitcoin’s recent selloff, leading to a price depression across the crypto markets. While Ethereum managed to rebound above $3,000, the price dip took the cryptoasset close to $2,600 as investors responded to the bearish downturn.
Santiment identified Ethereum’s price action as “not the healthiest look” for creating an uptrend, and indicated the majority of the trading was being driven by macro events such as the Evergrande meltdown and the U.S. Securities and Exchange Commission’s stance towards crypto.
Santiment also says Ethereum’s network growth is sending a troubling sign to investors:
ETH’s Network Growth has been stagnant for the past few months even after the price bottomed out. Price continued to grow but Network Participants continue to just range, this deviation is generally not a healthy sign.
Santiment attributed the change in Ethereum’s network activity to growing interest in other projects, such as Avalanche ($AVAX), coinciding with a gradual decline in NFT speculation:
As usual, if there are better speculative opportunities that are cheaper and yields higher ROI, people will be there. And for now, ETH isn’t the place for that.
Santiment concluded that $ETH’s price struggles are being exacerbated by speculators moving on to other cryptoassets, causing a stagnation in network growth.
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