Why did the price of Ethereum (ETH) fall today?

Ethereum (ETH) price fell on December 15 after failing to break the $2,320 resistance level. The recent price correction can be attributed to negative comments from regulators, a hack that affected almost the entire Web3 ecosystem, decreased activity on the Ethereum network, and criticism from former Ethereum Foundation developers.

A broader analysis of the time period provides a different perspective on the relatively narrow daily close change of 7.6% over the last 11 days. Ether gained 40% before entering the current $2,190-$2,360 range. As a result, the lack of a clear direction may simply indicate a period of accumulation.

SEC Chairman Gary Gensler speaks and Ledger suffers a massive hack.

The price of Ether has been influenced by the hype surrounding spot exchange-traded funds (ETFs), especially after $9 trillion global asset manager BlackRock confirmed plans to launch a spot Ether ETF on November 9. The momentum continued. It was built on November 21, when Bloomberg ETF analysts reiterated that there was a 90% chance that a Bitcoin (BTC) ETF would be approved by January 10.

However, the regulatory environment changed on December 15th when the U.S. Securities and Exchange Commission (SEC) issued a statement regarding the denial of Coinbase Exchange’s petition. SEC Chairman Gery Gensler argued that existing laws and regulations apply to the “cryptocurrency securities market,” adding that “now is the appropriate time to take regulatory action.”

What’s even more concerning is that the SEC’s recent report cites “large-scale fraud, abuse, and non-compliance” in the cryptocurrency market and emphasizes that “it is in the public interest to invest when intermediaries are registered and supervised.” In response to Coinbase’s main complaint about “discretionary rulemaking,” Gensler noted that such actions are “a critical element of our ability to faithfully implement congressional mandates.”

The Ledger connector hack that occurred on the morning of December 14th also recently had a negative impact on the price of Ether. The incident exploited Ledger’s tools that enable communication between hardware wallets and various decentralized applications (DApps). Hackers used a phishing exploit to gain access to the Node Package Manager JavaScript account of a former Ledger employee.

According to the team at Linea, ConsenSys’ zero-knowledge rollup, the attack also affected major wallet provider MetaMask and the entire Ethereum Virtual Machine (EVM) ecosystem. The issue was resolved in less than an hour, but it revealed that the Web3 ecosystem still relies heavily on code developed and maintained by enterprises. Essentially, this breach had a negative impact on investor perception of the decentralized finance (DeFi) industry.

Related: Ledger attack shows company ‘learned nothing’ after multiple breaches -ENS Developer

Ethereum DApps have been affected by high network fees.

The Ethereum network is also facing its own challenges, opening the door for competing blockchains like Solana (SOL) and Avalanche (AVAX). For example, Ethereum’s average transaction fee of $9.90 is impractical for most transactions, forcing users to deal with the complexities and risks that come with relying on layer 2 solutions.

These issues are reflected in Ethereum’s total value locked (TVL), which has fallen 5% since November 30 and is now at $12.26 million ETH, near its lowest level since August 2020. In comparison, Solana’s TVL increased by 14% on SOL. period over the same period. However, not all DApps require large deposits, and DeFi applications are also optimizing liquidity pools. Therefore, analysis should be based on activity level.

While Ethereum’s decentralized application volume has remained below $1.8 billion for over a month, the Solana network has experienced a healthy increase to $700 million per day. Avalanche’s current daily average of $250 million may seem small compared to major blockchains, but it represents a 250% growth since the end of November.

The former Ethereum Foundation developer’s negative comments caused a stir among Ethereum investors after Andrew Howard posted them on the X social network on December 14.

Lane Rettig, former developer at the Ethereum Foundation:

“I was just pumping Joe Lubin’s bag” (Joe Lubin is the co-founder of Ethereum)

“We will never have another #Bitcoin. We will never have another perfect concept.”#Bitcoin It is the only cryptocurrency asset available for investment. pic.twitter.com/PLSx88NqBp

— Andrew Howard (@Andrew_J_Howard) December 14, 2023

It is worth noting that this social network post comes at a time when Ether is already facing pressure from other sources, most notably regulation and declining network activity, which could further exacerbate Ether’s negative appeal.