Ethereum Sell-Off Inspired by Bitcoin, Inflation and High Transaction Fees

The market valuation of Ethereum (ETH) dipped below $2,000 today. This is the first time this popular cryptocurrency, with a, um, special place in the heart of PC enthusiasts, has dropped below this milestone value since July 2021.

(Image credit: CoinMarketCap)

On Monday as Bitcoin’s (BTC) price was collapsing. we noted that ETH usually shadows its bigger brother. This is indeed the case — BTC dropped below $26,500 for a short period earlier. Ethereum and Bitcoin were priced at $2,385 and $32,790, respectively, when we covered their prices on Monday. At the time of writing, ETH is down 12.5% in the last 24 hours, while BTC is down 4.1% in the same period.

Many of the woes of the BTC is facing are also inflicted on ETH, as they are similarly speculative assets. Key pressures on both cryptocurrencies include the high inflation around the globe, high fuel pricing, worries about recession and stagnation and banks increasing interest rates to encourage savings. The stock market is also feeling the ill effects from all of those factors. As value goes down, people are pulling out of speculative assets and moving them into safer, less volatile investments.

The last time we saw a significant drop in cryptocurrency prices, miners offloaded graphics cards, which caused a glut of used GPUs. This brought prices down quickly and impacted the sales of new graphics cards for several months.

Yuga Labs Bored Apes Bash ETH

ETH has had another, more unique issue over the past few days. Yahoo Finance reports that demand for virtual pieces of Yuga Labs’ Otherside Metaverse Land on was so high at launch that there was a massive spike in transaction fees. There were 55,000 lots put up for sale for around $7,000 each. Yuga Labs is best known for the success of its Bored Ape Yacht Club NFTs.

One sale of a single $7,000 piece of Yuga virtual land attracted $44,000 in transaction fees, reports Yahoo. If this wasn’t a damaging enough statistic regarding the efficacy of ETH as a useful cryptocurrency for the masses, there was worse news to come. Yuga was unhappy with the way ETH performed on its big land sale day, and has subsequently decided to take its Apecoin cryptocurrency off the Ethereum mainnet and onto its own native chain. This one act will drain $2.5 billion of capital from the Ethereum ecosystem.

Yuga sold out of Otherside Metaverse real estate, raising over $200 million. Some individuals flipped their purchases quickly for a fast profit. However, Yahoo observes that many virtual plots of land are now valued at below original sale price.