Ethereum Price Drops As Investment Sentiment Is Impacted By Worries About Regulation and a Halt to DApp Usage

A decline in DApp adoption and regulatory worries are driving down the price of Ether.

Source: blockworks.co

On Nov. 27, Ether was having trouble holding onto the $2,000 support after making three failed attempts in the previous fifteen days to break beyond the $2,100 barrier. Ether's profitability is declining at the same time as the mood in the cryptocurrency sector is declining overall.

The unfavorable view may have been exacerbated by recent events, including a U.S. Department of Justice (DOJ) warning of probable serious consequences for exchange CEO Changpeng CZ Zhao. U.S. authorities requested a review and rejection of a judge's ruling allowing CZ to go back to the United Arab Emirates on a $175 million bail in a document submitted to a federal tribunal in Seattle on November 22. Zhao would present an inappropriate risk of departure and absence if permitted to leave the country while awaiting punishment, according to the DOJ.

Ethereum DApps and Decentralized Financial Services Encounter Fresh Difficulties

The desire for DeFi apps on Ethereum has also dropped in the wake of the latest $46 million KyberSwap hack on Nov. 23. The event has raised questions over the health and safety of the DeFi business as a whole, even though it had previously undergone audits by security specialists in 2023. Investors were lucky that the attacker was ready to repay a portion of the money, but the incident highlighted the industry's weaknesses.

A blog article published by Tether, the company that created the $88.7 billion stablecoin USD Tether, on November 21 further undermined market trust. The article mentioned the Federal Bureau of Inspection's impending participation and touted the U.S. Secret Service's recent incorporation into its framework. The announcement's absence of specifics has sparked conjecture about a legal environment for cryptocurrencies that is becoming more onerous, particularly in light of exchanges' increased inspection and Tether's tighter cooperation with regulators. These elements are probably responsible for Ether's decline in value, as evidenced by a number of market and on-chain indicators that point to a drop in ETH interest.

Investors get wary as deterioration is reflected in ETH on-chain statistics. Just $34 million was invested in ether exchange-traded commodities (ETPs) last week, as reported by CoinShares. This amount represents a meager 10% of the flow observed by comparable Bitcoin digital currencies throughout the same time frame. This discrepancy is especially notable given the battle across the two securities for spot exchange-traded fund (ETF) acceptance in the United States.

Disclaimer: FameEX makes no representations on the accuracy or suitability of any official statements made by the exchange regarding the data in this area or any related financial advice.