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What’s holding Ethereum [ETH] back from 5K?

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Ethereum [ETH] is hovering near its all-time high for quite some time now. There has been a possibility of a supply crunch scenario that is driving the price factor upward, due to the fact that the staking contract hit 8.2 million ETH with another 8 million tokens currently locked in the DeFi sector. Moreover, about 860k worth of ETH left the centralized exchanges, lowering the availability of the coin’s total supply and thereby increasing the likelihood of an impending supply squeeze condition.

However, there is a threat to Ethereum’s bullish price movement as the average network fee currently rose to a record high of $63.50, the highest in five months, as observed by prominent on-chain analytics platform, Santiment. In their own words, the tweet read,

“Ethereum is sitting at $4,780 at the time of this writing, and optimism that $5k is around the corner appears high. One of the few things holding $ETH back is the fact that the average network fee sits at $63.50, which was last this high on May 12th.”

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Here’s why Ethereum’s [ETH] price dominance might get delayed

The latest price surge and the overall market buoyancy might get stifled as high transaction fees continued to be the cause of concern. In fact, recently privacy enabled Brave browser opted for Solana blockchain for its ability to scale up transactions and cut down costs, instead of Ethereum.

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With respect to Bitcoin [BTC], the two largest crypto assets by market cap have had issues with high transaction cost for some time now but this month, Ethereum’s network fees rose significantly higher than the king coin. According to data in bitinfocharts, the average ETH transaction fee was currently sitting at $56.58 compared to $4.69 in the Bitcoin network, a massive 1106% higher.

Moreover, earlier this month, the leading altcoin had witnessed its first week of negative supply issuance driving the transaction fees a notch higher. Interestingly, more than 724 ETH or nearly $3 billion were destroyed since the London upgrade was newly introduced in August 2021. Despite the subsequent deflationary phenomenon, Ether supporters are encouraging users to migrate and utilize its emerging layer two ecosystems. In a nutshell, high gas fees have affected a majority of the users and caused them to opt for other cheaper options. 

Ethereum Rides The Bull As Market Shows Signs Of Recovery

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Ethereum’s rise and fall on the charts were also mimicked by other top honchos of the crypto world at July open. Although ETH’s price action evidently sided with the bear, long-term performances continued to blink green. It was also the biggest gainer in the top 10 club over the previous 7 days.

Ethereum’s market was majorly captured by Binance which controlled $1.345 billion of running circulation. Huobi, which came in second, only controlled $613 million of all Ethereum available. Ethereum also made news recently when its active addresses surpassed that of Bitcoin. On-chain analysis organization Santiment had tweeted:

“On a day that saw history be made with #Ethereum surpassing #Bitcoin in daily active addresses for the first time, #altcoins came to play. $KSM, $COMP, and $ZIL were among many projects to make an imprint on the markets, while $BTC ranged around $34.5k.”

Ethereum 1 hour:
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Ethereum Rides The Bull As Market Shows Signs Of Recovery 5

The PSAR’s hold above the price candles was enough to show the bear’s impact on the ETH market. If the pressure mounts, then the price can fall further. At the same time, the Relative Strength Index sharply fell towards the zero line after bouncing from it. The dip was a sign that the capital leaving the market had surpassed the influx.

Even Ethereum’s RSI showed no reprieve as the graph headed towards the oversold zone. Once more users buy into the market, one can see the graph climb into the overbought zone again.

Ethereum 1 day:
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Ethereum Rides The Bull As Market Shows Signs Of Recovery 6

The long-term chart was much more bullish than the hourly timeframe. The PSAR and the CMF were bullish with sharp inclines. The PSAR’s settlement below the candles was enough to boost user trust.

On its own, the CMF had climbed above the zero line with a sharp incline. The newly invigorated market was seen as the ideal candidate to lay the building blocks for Ethereum’s future. The RSI settled on the line as the selling pressure and buying pressure equalized on Monday.

Ethereum bucks the trend as market bigwigs set bearish tone

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Ethereum recently broke out of its bearish price action after settling below periodic moving averages. The onus was on the largest altcoin in the market to set its tone after Bitcoin also rallied on Monday. As Ethereum crossed the $2000 market again, Bitcoin surged to a week-long high of $34,000.

Last week’s bearish trend had triggered ETH sell-offs that prompted many naysayers to throw shade at the cryptocurrency. The latest climb was proof that the market was undergoing corrections just as seen in the S&P industry. After witnessing double-digit drops, Ethereum has recovered in the last 24 hours by a significant 9 percent.

At press time, ETH was trading for $2001 with a total market cap of $232 billion. Although this was miles ahead of Bitcoin, Ethereum’s market cap was more than the combined caps of USDT, BNB, ADA, DOGE, and XRP.
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Ethereum bucks the trend as market bigwigs set bearish tone 9

ETH 1 hour:

Ethereum’s Parabolic SAR stayed below the price candles: a situation that glowed positive for investors. A bullish uptick showed by the PSAR also elevated the immediate resistance to $2001. The Relative Strength Index re-entered the price zone and settled near the overbought zone. If the RSI’s parallel hold remains, ETH is in for a good price spell.

Even the Chaikin Money Flow indicator followed in the footsteps of the RSI after moving sinusoidally. Although the graph was a good distance away from the zero line, it would do well for the cryptocurrency to have more capital flowing in.

ETH 1 day:

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Ethereum bucks the trend as market bigwigs set bearish tone 10

In the long term, Ethereum registered a slight improvement in sustained price holds. Although the support broke recently, the cryptocurrency showed signs of quick recovery to go past the $2000 mark. As it stands, Ethereum has to remain vigilant about the support that was formed in March.

The CMF in the long term dipped below the zero line. This phenomenon has occurred only twice since December of 2020, with the last two happening in the space of 40 days. If no brakes are applied on the capital leaving the market, Ethereum may be looking at a slow recovery.

Ethereum’s long-term RSI struggled to break away from the oversold zone but alas the bear’s pull remained strong. The RSI was at its lowest since the beginning of the year with analysts predicting a bull run to overturn the trend. Even the Parabolic SAR sided with the bear as the pressure accumulated below the price candles. This trend usually continues till the price capitulates during the upcoming market week.

Ethereum Slips below Support As Market Gets a Visit From Bear

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A bearish sweep over the weekend left the cryptocurrency market in a lurch as several of the top coins witnessed massive slashes on their market caps. Bitcoin, Ethereum, and the rest of the market all suffered double-digit falls in the last week with some of the more significant action coming from the altcoins.

Ethereum’s earlier upswing had resulted in a large influx of investors with a majority of them still HODLing through the price crunch. At the time of writing, Ethereum was trading for $2019 at a market cap of $234.01 billion. The previous week had pegged the cryptocurrency’s value down by 21 percent as the daily trading volume capitulated at $28.53 billion.

Ethereum 1 hour:

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Ethereum Slips below Support As Market Gets a Visit From Bear 13

The hourly charts had bad news for Ethereum as immediate support was broken on June 21. As of now, the immediate support and resistance clocked in at $1997 and $2638.3 respectively. Despite the dip, proponents of the cryptocurrency have been clamoring for more people to enter the Ethereum ecosystem.

A majority of the indicators in the following technical analysis pointed to a bearish signal weakening on the threshold. The Parabolic SAR was above the price of candles which was a sign of the bear’s hold on the market. Although the RSI had fallen below the oversold zone, the following capitulation was a positive sign for the investors. Only the Chaikin Money Flow indicator blinked green for Ethereum as it’s crossed the zero line into bullish territory.

Ethereum 1 day:

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Ethereum Slips below Support As Market Gets a Visit From Bear 14

Daily charts for Ethereum painted a bearish picture of Ethereum with a break in its 60-day price support. The current price support stands at $1997 with a hold missing in the immediate vicinity. Ethereum’s current price behavior is in tandem with the rest of the cryptocurrency market as billions have been wiped off the market.

The long-term RSI was heading towards the oversold zone as the number of users selling ETH overtook those buying into the market. According to the Parabolic SAR, Ethereum was heading for some more bearish tantrums in the near future. Unlike the hourly charts, the CMF was not forgiving in the long run. The CMF had fallen below the zero line which signified that the capital leaving the ETH market was higher than the influx.

Here’s Why Ethereum Miners Dumping Coins Might Not Negatively Impact Price

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The DeFi hysteria has significantly had not only helped Ethereum but has also impacted the ETH miners. But now it appears that the miners of the network were dumping coins across various cryptocurrency exchanges. This was revealed by the crypto intelligence platform, Santiment which further revealed that last week’s increased FOMO involved with the on-chain activity, and the trader has faded. Following which the crowd sentiment has flipped back to bearish.

But it does not necessarily indicate a negative picture. Not yet.

More than what meets the eye

Ethereum’s price seems to have stagnated when compared to Bitcoin. While it did break above the level of $400, the stint was rather short-lived as it sustained a minor pullback and was currently trading at $396. This correction to a local low was something that has been materialized every time there was a spike in the ETH’s Token Age Consumed.

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The metric, Token Age Consume, essentially indicated the number of tokens changing addresses on a particular date, multiplied by the days since it last moved. In short, it provides data on the movement of coins that has been dormant for a long time. Hence, the spike noted in the above chart denoted that a significant amount of previously dormant coins were moved either between exchanges or wallets which sparked a minor sell-off resulting in the pullback in question.

Since the local bottom has now been formed, there could be potential short-term behavioral shifts among the market stakeholders in the coming days and Ethereum could see rising pressure from the buyers’ end.

DeFi’s Role

The role of decentralized finance in Etereum’s price surge has been tremendous and DeFi market’s total value locked is continuously increasing. As of the 26th of October, the TVL figure was registered at $12.39 billion on DeFi Pulse’s website. This was another positive indicator that depicted Ethereum’s capability for an uptrend.

Strong technicals

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The ETH price candles were supported by both the 50 [Pink] and 200 [Purple] daily moving averages. The 200 DMA was hovering below the 50, depicting a bullish picture for the coin. In addition, the RSI was well above the 50-median line but was not in the overbought territory. This depicted a sentiment of rising buying pressure and not its exhaustion among the market participants.

It is also important to note that there is no fear of missing out [FOMO] and erratic behaviors from investors in the market. That not only indicated the market heading towards a tad big more maturity but also that the uptrend is likely not overextended.

Chainlink, Ethereum, XRP Technical Analysis on 5th September 2020

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The COVID-19 pandemic left almost every other market, including the crypto market, crashing to severe lows. However, the crypto industry was evidently faster in terms of recovery compared to several others. While the past two weeks were eventful for the crypto market, it didn’t seem to hold on to the bullish phase for too long. During the time of writing, the entire market was seen turning red, and Bitcoin’s dominance stooped down to 57.1%

Chainlink [LINK]

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LINK was undoubtedly one of the best performing digital assets this year. The altcoin made its way to the top 10 and currently stands as the fifth-largest cryptocurrency with a market cap of $4.75 billion. However, the coin seemed to be following the trail of other cryptocurrencies as it was plummeting by 2.3 percent in the past hour. At press, time the coin was trading for as low as $12.35.

Chainlink’s LINK seems to be making attempts to push past $12.90 which has been a major resistance for the altcoin. The dotted marker of the Parabolic SAR lounged below the LINK candlesticks which prevented any potential downward breakout, further indicating the presence of bulls. However, a strong sell-off sentiment remains intact as the Relative Strength Index marker dropped below 50 median.

Ethereum [ETH]

 

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ETH turned several heads after it pushed past $400. However, the second-largest cryptocurrency with a $41.8 billion market cap witnessed a 1.6 percent drop in its price over the last hour. This further led to ETH trading at a low of $373.38, during press time.

While the bears continued to guard the resistance level of $400, the price of ETH plummeted below a major support level of $380. Both the MACD as well as the Klinger Oscillator displayed bearish crossover indicating the strong presence of bears in the ETH market.

XRP

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Even though XRP did not endure a massive drop in its price change, the fourth largest coin was trading at $0.2488. While the XRP community has been hoping that the altcoin would move beyond cents, XRP went ahead and fell below a major support line.

The Awesome Oscillator indicator displayed red bars indicating a shift in momentum. Chaikin Money Flow also followed suit as it indicated an outflow of the capital further highlighting the presence of bears, With key indicators revealing signs of a bearish territory, XRP is unlikely to push past the resistance level at $0.260.

Bitcoin and Ethereum Are Here to Stay After 2020: Mike Novogratz

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Bitcoin and Ethereum may have faced extended periods of uncertainty in 2020. From the breathtaking rally in January-February 2020 to the unforeseen collapse in March 2020, and now, on the cusp of triggering a bull run, the top two assets were faced with significant curveballs thrown in their direction.

With major proponents within the industry and outside professionals such as Paul Tudor Jones supporting Bitcoin and other altcoins, Mike Novogratz stated that 2020 could possibly be the most important years for digital assets.

Speaking to Bloomberg, the Galaxy Digital Holdings Founder and CEO stated that the crypto ecosystem has benefited immensely in the current economic landscape with a perception of fixed zero interest rates, while the central banks have been trying to jam liquidity in the market. With a positive sentiment settling in, both Bitcoin and Ethereum have been to register stellar performances from a price perspective.

Additionally, Novogratz added about the speculative trading of DeFi and admitted he had never seen such liquidity pumping in such speculative projects but drew similarities to the prospect of Tesla in early 2019. Calling it a ‘speculative frenzy’, he believed it was still early days in DeFi and the astronomical growth did worry him a little bit.

With respect to the new coins and DeFI coming up and incurring interest from the rest of the market, Novogratz stated that it was a little reminiscent of the 2017 bubble when ICOs were attracting new investors and liquidity frenzy was taking place. However, he said,

“I think DeFi is going to be around longer. They are building infrastructure but we are in a sandbox that is getting filled with liquidity at the moment, and traders have to be very careful.”

Bitcoin prices are up due to Institutional Buyers

With regards to Bitcoin, Novogratz stated that the BTC’s price has been higher due to the institutional buyers who have a high net worth, hence they have been able to consolidate higher up in the charts. These buyers are coming in ‘methodically’ and accumulating while foreseeing profits in the long-term, unlike Ethereum where DeFi enthusiasts are flooding in for a possible short-term gain.

Finally, Novogratz concluded that digital assets like Bitcoin, Ethereum are definitely not going away after the year they had in 2020. Bitcoin as a store-of-value might be a ‘finished product’ according to the Galaxy Digital CEO but he prediction further innovation with other digital asset projects.

Ethereum May Still Cross $500 in September, Here’s Why

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The volatility reflected on Ethereum’s chart was for everyone to see in the current market. After registering a value of $289 on 1st September 22:00 UTC, the price unceremoniously dipped down to $420, just 11 hours later. The larger ecosystem believed that the resistance implied just below $500 is possible too much to handle for Ethereum. According to Santiments’ recent data on Twitter, its Daily Active Addresses were under a severe decline as well.

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The analytics platform believed that the largest altcoin has been indicating weak fundamentals all-throughout August and that’s why the bullish sentiment was quickly flushed over the past 24-hours. They stated,

“Daily Active Addresses vs Price Model continues to show a clear deficit in address activity to justify ETH traders’ bullish euphoria quickly faded.”

However, it is likely that Ethereum’s fundamental weakness might not stop the altcoin’s pursuit of attaining a position above $500.

Deribit ETH options record new highs 

According to Deribit’s recent institutional newsletter, Ethereum concluded a drastically positive period for itself in terms of Options activity. The exchange stated that the total turnover registered by ETH Options topped $15 billion in August 2020, which was 44% more than in July 2020.

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The number of ETH option contracts recorded was also an all-time high with 2,477,195 ETH contracts traded, up by 32% from July 2020. If the chart above is observed closely, it can be pictured that ETH activity has slowly eclipsed Bitcoin‘s on Deribit in August 2020.

The bullish sentiment attached to Ethereum was verifiably strong in spite of the massive price dump 24-hours before.

How does Sentiment help Ethereum now?

It is extremely important to understand that the lack of Daily Active Addresses has also been a price blessing for Ethereum. The decline of DAA is in direct correlation with the usage of DeFi, as the congestion was pricing out unique transactions taking place on the network.

However, the benefits are evidently being noticed with ETH attaining yearly-highs on a consistent basis.

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At the moment, the probability of Ethereum closing above $520 is 14%. In comparison, the probability in July was only 3%, which means that the bullish sentiment was reciprocated strength in spite of weak fundamentals.

In the long-run, it can be detrimental for Ethereum’s adoptions and organic growth is vital for long-term sustenance but for the time being, price-performance meant everything to the market, and Ethereum is standing strong on those foundational grounds.

Ethereum and Ether: Are Their Futures Align in Terms of Growth?

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Ethereum is rapidly becoming the most widely used blockchain in the industry, and its rising transaction fees are evident in the current situation. Congestion has been created for a number of reasons, with DeFi and Tether’s issuance being the top two reasons.

Now, with demand for block space getting out of hand, it was recently reported that Tether had adopted Ethereum’s scaling solution OmiseGo (OMG) network in order to reduce the confirmation time of the transaction,

As indicated earlier, the adoption of OmiseGo token might have helped on its expedition of doubling its value in the past week. However, with Ether largely becoming irrelevant on its own blockchain, is there a future where Ethereum’s growth continues to pull Ether’s value up?

Ether will accrue Ethereum’s value; eventually

According to a recent blog post shared by Ethereum supported by Ryan Sean Adams, it was explained that Ether’s demand would not be replaced on ETH due to three simple reasons. First, the blog stated that Ethereum’s block space demand makes Ether valuable as well because the native token is the only settlement medium on the platform. It was explained,

“There’s virtually an endless amount of use cases for Ethereum’s blockspace. All of it drives a tiny demand for ether.”

Secondly, Adams believed that the primary ethos of cryptocurrencies is to minimize the dependency of capital on centralized entities. DeFi is currently playing a critical role in that movement and it perfectly falls in place with Ethereum’s money protocol.

Right now, Ether is the most trust-minimized asset on the blockchain and Ether will continue to hold capital priority in the ETH economy.

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The post added,

“This demand for ETH from DeFi is apparent in the data too. There’s now over 4.5 million ETH locked up in Ethereum financial protocols—valued at nearly $2B. This means that roughly 1 in every 25 ETH in circulation is locked up in DeFi right now.”

Lastly, Sean Adams believed that the imminent implementation of Ethereum 2.0 will lead to Ether’s value in the future to be looked as a productive asset. In fairness, in spite of these strong arguments for Ethereum, these are still assumptions based on what can happen whereas the current facts are that Ether has not been able to keep up with Ethereum’s development. Hence, only time will tell if Ether’s price position improves with respect to Ethereum’s growth as a blockchain.

Ethereum: ETH Was Valued at $1042 When it Last Reached 1.24 Million Daily Tx.Count

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The spotlight continues to be on Ethereum, as August is turning out to be an extremely price lucrative month for the largest altcoin. Since 1st August, Ethereum was registered all-time highs of three occasions, going step by step from $400 to $425 to $443. Although after clocking in $443, the asset has faced corrections, the overall trend remains extremely bullish right now.

With respect to metrics as well, Ethereum’s fundamentals haven’t shied away from new heights. After registering a 20-month high hashrate in the charts, while transaction fees continued to run riots, Ethereum’s daily transaction count is now nearing an all-time high as well.

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According to Santiment’s recent data, the daily transaction count of Ethereum’s network is quite close to its all-time high in the charts. Back during the rally of late December 2017, on January 4th, 201 when Ethereum mustered a valuation close to $1042 the daily transaction count reached a high of 1.34 million addresses, and earlier this week, the count was closing at 1.27 million.

Additionally, the current transaction fee levied on Ethereum also clocked in two all-time highs in a row, with fees of 17.8k on 8th August, and 20.3k on 13th August. All the above data typically suggest high user activity but the truth might be something else well.

DeFi is inflating the system, not user activity?

As reported earlier, Ethereum’s active addresses are falling down the levels day by day when other metrics such as hashrate, miner revenue, and ether fees are going up.

That is largely contradictory in terms of equating a fixed factor on why Ethereum’s network is so over-utilized.

With a doubt, DeFi’s role is huge. Many are suggesting that Ether’s price growth is due to the explosive expansion of DeFi, as the protocols are leading the charts in terms of token transactions, interacting with other dApps, and the Ethereum network itself.

Ethereum options; the only clean sign of user activity?

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Now, even though there is substantial doubt about the authentic user activity in Ehtereum’s network, the Open-Interest on Deribit exchange suggests that Ethereum is still a pretty sort out asset from an investment perspective. In a short time, from May 2020 to August 2020, Deribit’s ETH OI was risen by $200 million, and despite the congestion in the network, Ethereum’s continues to maintain a favorable stance with the investors.