Ethereum (ETH) experienced a downturn on Tuesday, dropping to $3,362 as Bitcoin’s decline affected much of the crypto market.
Despite this, historical data indicates that the second quarter has typically been a positive period for Ethereum. Vitalik Buterin‘s recent insights on how “The Purge” could enhance Ethereum’s decentralization also suggest long-term growth potential.
However, Ethereum’s future price trajectory faces uncertainty, particularly as the US Securities and Exchange Commission (SEC) has not signaled approval for spot Ethereum ETF applications. This lack of regulatory clarity has led to Ethereum’s price movements being largely driven by its correlation with Bitcoin rather than its own fundamentals.
Over the past 24 hours, Bitcoin’s nearly 6% decline has influenced Ethereum’s 6.7% drop, resulting in over $500.6 million liquidated from the overall crypto market. The largest single liquidation order was valued at $7.48 million, with total ETH liquidations reaching $91.91 million, with long positions accounting for $75.1 million.
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Despite the current challenges, historical data indicates that Ethereum could still perform well in the second quarter. A chart by crypto analyst @ali_charts on X reveals that Ethereum has historically seen positive results in Q2, except for 2022 when it recorded a 67.34% loss. The historical performance of ETH in Q2 has an average gain of 66.59% and a median gain of 15.29%.
The potential delay in SEC approval for a spot Ethereum ETF could lead to market turbulence, as noted by @ali_charts. However, approval from the SEC would provide Ethereum with increased institutional support and exposure to retail traders, potentially triggering a price rally.
Vitalik Buterin’s recent blog post highlighted the introduction of Ethereum Improvement Proposal (EIP) 6780 during the recent Ethereum Dencun upgrade, a significant part of “The Purge.” This proposal aims to streamline Ethereum’s operations, reducing the resources required to run an Ethereum node while enhancing decentralization and security.
In another development, Buterin reposted a blog post discussing Layer 3 solutions that serve a different purpose from Layer 2 solutions. He emphasized that Layer 3 solutions are only viable if they offer unique scaling benefits compared to Layer 2 solutions.
Overall, while Ethereum faces short-term challenges, such as regulatory uncertainties and market fluctuations, its long-term prospects remain promising, driven by technological advancements and potential regulatory clarity.