Ethereum at the fore of smaller cryptocurrencies declines 📉

The crash of the cryptocurrency market has caused extraordinary investor activity. Almost all altcoins are losing although the eyes of traders are directed primarily towards the largest and most trusted to date, Ethereum. In the face of increasing on-chain activity on the Ethereum blockchain, internal 'gas fees' have reached a record high, with their value exceeding $4.5 billion:

• Along with Ethereum and Bitcoin, almost all smaller cryptocurrencies like Cardano, Solana, XRP and Avalanche are losing ground. Relative resilience is shown by the Ethereum-linked blockchain Polygon, which a few days ago was selected by Meta Platforms as the project that will participate, along with Ethereum (the OpenSea exchange), in the adoption of NFT technology, in the Wall Street giant's applications;
• As a result of the panic, Ethereum reached deflation for the first time since 'The Merge' in mid-September, as the equivalent of the transaction fees of the EIP 1558 update burns the available Ether by limiting its supply;

Ethereum has reached deflationarity for the first time since The Merge, which was expected by developers and the market. Unfortunately, the conditions under which Ether reached this target are not favorable, and the high trading volume is due to market panic, not buying euphoria. The current supply of ETH is close to 120.5 million tokens, roughly 7 times the currently available supply of Bitcoin, which is about 19 million tokens. Source: Etherescan

• Recent rumors inside crypto market indicates that the financial hole per FTX exchange investor caused by the FTX/Alameda insolvency could be as high as $250,000 which, if true, could exceed the capacity of Binance, which has pledged to help the failing exchange. Market speculation is already beginning to swirl even around the Binance exchange itself, which holds some $8 billion in Ethereum cryptocurrency reserves and could theoretically begin selling them in the event of a hypothetical liquidity crisis. The number of cryptocurrency shorting traders on the Bitfinex exchange has nearly doubled in 24 hours.

The unofficial balance sheet of Sam Bankman-Fried's fund, Alameda Research, indicates about $222.39 million in assets. Thus, it can be assumed that the problem caused by FTX and Alameda itself is slowly receding into the background and the market is already preparing for a possible domino effect, similar to the one we saw after the collapse of Luna/Terra in May this year. Source: LookonchainPolygon chart, D1 interval. Yesterday's cryptocurrency market crash halted Polygon's valuation in an area of support marked by the retracement of the 23.6% Fibo of the currently ongoing bear market and the confluence of periodic, exponential moving averages. Source: xStation5
 

Ethereum, H4 interval. The relative strength index has reached yearly lows and now stands at 12 points signaling an extreme oversold phase. In comparison, the RSI in June, when Ethereum settled below $900, was around 20 points. Source: xStation5