With Ethereum [ETH] entering hibernation, here’s all investors need to look out for

ambcrypto.com:

The altcoin market crashed significantly in the month of May. Ethereum, the largest altcoin extended its decline below the $1,820 support against the U.S Dollar. At press time, ETH suffered a fresh 11% correction as it traded below $1,7300.

What can investors expect next?

Ethereum’s fee structure has been on a constant decline as the network approaches the “Merge”. At present, ETH’s average fee costs traders just $2.54 per transaction- the lowest ETH cost level since July.

Source: Santiment

While this might sound like a positive development, there are some concerns attached to it. This also showcased a declining demand/traction for the largest altcoin within theNFT, the DeFi domain. 

The slow/declining development could showcase another attribute, i.e. arrival of the hibernation phase. On 27 May, On-chain data provider Santiment reported:

“Ethereum continues to show extreme low fee levels, indicating very minimal activity and hints of stagnancy and fear. This hibernation behavior also applies to ETH‘s often paired stablecoin, DAI.”

Here’s a graphical representation highlighting this narrative.

Source: Santiment

Low fees mean very little activity, and no one is interested to do anything. Is there any connection to stablecoin velocity (let’s say DAI)? Well, Santiment’s blog opined:

“It looks like velocity (a measure of how quickly money is circulating in the crypto economy) has always decreased when we went to the top. Quite low now.”

Looking at these two charts, a hibernation picture comes to mind. In addition, the transaction volume on a seven-day average has dropped to the lowest it has ever been. Thus, justifying the hibernation claims.

Source: Glassnode

Here’s another way to look at it. This hibernation from investors is actually