The Ethereum price is in the red today, because the chances of an Ethereum ETF have decreased for May and sticky inflation in the United States is weighing on the price. Ethereum is struggling to hold support above the $3,000 level.

What’s going on with Ethereum?

Investor sentiment has been further depressed after Susan Collins of the US Federal Reserve suggested that high inflation in America could mean that interest rates will remain at this elevated level for longer.

In her May 8 speech, Collins shared that a slowdown in economic growth may be needed to tame the demand explosion in the economy, which should reduce inflation.

As long as interest rates remain above inflation, there is less incentive for individuals and companies to take out loans for consumption or production; that’s the story.

If this creates fear of a recession among investors, it could drive investors towards US government bonds. After all, they can earn interest there relatively safely, while Ethereum and Bitcoin do not offer guaranteed returns at all. That may explain some of the price drops for Ethereum.

Pressure from lawmakers and bad metrics for the network

The chance of the rapid approval of a Spot Ethereum ETF was also briefly suppressed by the US Securities and Exchange Commission (SEC); the country’s financial regulator.

Recently, the applications from Invesco and Galaxy Digital were postponed until July 2024. Gary Gensler, the chairman of the SEC, also declined to answer questions about Ethereum’s status as a financial asset on May 7 in an interview with CNBC’s Squawk Box on the American television.

Furthermore, Ethereum’s on-chain picture is currently somewhat poor. Activity on the blockchain is decreasing. According to data, Ethereum’s burn mechanism has hit its lowest level since 2024.

This means that fewer Ethers are thrown into the digital ovens, so that more remain in circulation and that of course also puts pressure on prices. At this rate, Ethereum has an annual inflation of 0.555 percent, while it was previously negative.

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