EOS price has dropped by almost 5% despite positive development about EOS launching its EOS Ethereum Virtual Machine (EVM) feature on the testnet.
EOS token price has been sea sawing since mid-March after the drastic fall between March 3 and March 11. Nevertheless, investors expected today’s news to at least put the token on a bullish trajectory but that has not been the case.
Why EOS price is falling after EOS EVM testnet launch
The EOS EVM testnet was deployed atop the EOS blockchain and will allow developers building projects on the Ethereum blockchain to launch the projects on EOS. Once fully deployed, the EOS EVM will offer negligible gas fees and faster transaction speeds than any other EVM mainnet. EOS has boasted of its EVM feature saying that it is more compatible than other Ethereum EVM alternatives.
“The EOS EVM is extremely performant, as it’s designed on top of the powerful EOS native network. EOS EVM will offer negligible gas fees and transaction speeds that are faster than any other EVM on the market. From a development standpoint, it is more compatible than other Ethereum alternatives thanks to design choices such as one-second block times.”
But what crypto traders and investors are asking themselves is why EOS price is dropping amidst such positive news about its native blockchain. And here is why.
While the price of the EOS token has dropped by almost 4% over the past 24 hours, its trading volume has considerably surged over the same time. EOS trading volume has increased by about 68% over the past 24 hours.
This kind of price and trading volume divergence is common when the buying activity is not enough to spur a price rally and in most cases indicates buyers’ exhaustion. Such a divergence is mostly followed by a further price decline.
Data from Santiment also shows that there has been a steep decline in the EOS token’s weighted sentiment since March 12, 2023 something that coincides with when the token started trading within a tight range. This suggests that traders are increasingly avoiding trading the token and the bullish conviction has dissipated.