The price of Ethereum went below $3,000 on the 20th of September as several global markets entered into a mode of risk-aversion. The Invesco China Technology ETF also shut down by 4.2%, while the SPDR S&P Metals and Mining ETF went down by 3.8%. Several analysts have pointed towards the ripple effects that could potentially be caused by Evergrande’s default- a major real estate company from China.
On the other hand, several other analysts have been blaming the debates that have been ongoing over the topic of the debt limit in Washington which could potentially be the catalyst for the volatility seen this week.
How these events impact Ethereum price
The 19th of September saw the United States Treasury Secretary Janet Yellen calling for Congress to increase the debt ceiling in the country in an op-ed published in the Wall Street Journal. Yellen went on to suggest that overlooking this could definitely bring about a risk of causing the government to default on its due payments whilst generating a widespread economic catastrophe which would soon find its way into the cryptocurrency sector- affecting token currencies like Ethereum and Bitcoin.
Even though the price level of $3000 still sits near the bottom range of the earlier performance over the last one and a half months, Ethereum still managed to accumulate over 210% gains in 2021. The total value locked or TVL of the network jumped from a whooping sum of $13 billion in 2020 to a price of $60 billion along with the DeFi sector experiencing quite a massive surge.
It can be ascertained that the quarterly futures of Ethereum have always been the preferred instruments of arbitrage desks and whales due to their price difference and settlement date from spot markets. However, the biggest advantage of the contract has been the major lack of a funding rate.