Ethereum Plunges 5% as Supply Surge and SEC Delay Weigh

Ether (ETH), the second-largest cryptocurrency by market capitalization, has experienced a significant decline of over 5% in the past 24 hours, falling below the $2,600 mark. This downturn comes amidst broader market fears and a growing supply of ETH, which has contributed to the slide.

The underperformance of ETH can be attributed to several factors. Firstly, the circulating supply of ETH has recently surpassed pre-Merge levels. The Ethereum Merge, which transitioned the network to a Proof-of-Stake (PoS) consensus mechanism, was initially expected to reduce the supply of ETH. However, this trend reversed in April following the activation of the "Dencun" upgrade. The upgrade introduced transaction "blobs" and reduced data fees, leading to a decrease in the amount of ETH burned during transactions. As a result, the supply of ETH has grown by 8,242 ETH since the Merge.

Additionally, the Securities and Exchange Commission (SEC) has recently delayed its decision on listing options contracts for BlackRock’s iShares Ethereum Trust (ETHA). This delay may also be contributing to the bearish performance of ETH. Other factors, such as increased competition from other networks like Solana and a restriction of the Ethereum Foundation, have also been affecting ETH's value relative to BTC, which has recently dropped to 2021 lows.

Despite the bearish performance, analysts have identified a pattern in ETH's price that mirrors a previous bullish run. Jake Ostrovsky, an OTC trader at crypto market maker Wintermute, has reported strong over-the-counter demand for ETH. Furthermore, analysts at Santiment have observed a decrease in the amount of ETH tokens at a profit since they were first mined, which could potentially signal a surprise bounce once crypto markets stabilize.