Ethereum has been fluctuating between $1,600 and $1,750 over the past week. Numerous indicators, meanwhile, seem to suggest that current support is still flimsy and might soon give way to selling pressure. Then, a return of $1,200 would need to be taken into account.
Ethereum is recovering quickly.
In recent weeks, Ethereum has experienced better times. Since May 3, its price has increased by 60%, greatly outpacing its steadfast opponent Bitcoin. This price rise is somewhat related to the Merge’s impending arrival, which was initially announced on September 19.
Many investors are piqued by the Ethereum network’s move from a proof of work system to a proof of stake mechanism. Optimism is in order after the many testing on Ethereum’s numerous testnets were successful. Many analysts predict that Ether’s supply will decrease by approximately 90%, creating significant buying pressure for the currency!
All of the locked assets, or the TVL for Total Value Locked, took advantage of the collapse of the Terra ecosystem to welcome new funds, which is another encouraging sign for the network. With approximately 59 percent of the total TVL of DeFi, Ethereum continues to solidify its position as the undisputed leader in decentralized finance, up 51% since May 3.
However, it is important to keep in mind that since the most recent crypto meltdown, the amount of these assets has evaporated like snow in the sun. In December 2021, 100 billion dollars were locked in Ethereum smart contracts; as of today, only 40 billion dollars are locked in. In a similar vein, the average price of gas has decreased from $7.50 at the beginning of the month to $0.90 today. an indicator that the network isn’t currently overloaded but that fewer people are using it.
Optimistic but cautious traders
It is always interesting to observe the derivatives markets in order to get a better understanding of the market mood. The “delta skew” is one of the first signs we can use. This indicator dips below the -12 percent line when traders anticipate a rise in the asset’s price. On the other hand, a negative trend is frequently indicated when it exceeds 12 percent.After reaching a peak of 30% in the middle of June, we are now below 12%. Because of this, traders are optimistic about Ether’s future trajectory.
Leveraged markets are a different indication that might be particularly useful for tracking market mood. As a result of the leverage effect, this approach enables traders to have greater capital. a riskier method that should only be used by experts in the field. The exchange Bitfinex is well known for providing a pretty in-depth picture of this market, particularly for large accounts with significant positions held by traders and whales. On July 2, 500,000 ETH reached a peak in long positions, or purchases, reaching their biggest level since November 2021.
These situations have recently become more condensed near the $1600 support level. In order to better protect themselves in the case of a further decline, traders appear to be fearful of a potential downward movement and have so curtailed their long exposure. If this support gave way, Ethereum would undoubtedly retrace its steps to the previous range’s bottom, or about $1,200, where the last resistance was successfully crossed in mid-July. Since the indications do not provide exact direction, it appears that the market as a whole is particularly difficult to understand.
Additionally, the overall economic and geopolitical environment continues to be highly tense, and many experts continue to predict numerous shocks by the year’s end, both on the cryptocurrency market and on the traditional markets. However, as was already indicated, the Merge should enable Ethereum to compete, at least temporarily. If all goes according to plan for the industry leader in smart contracts, this will be a powerful signal to the market that will undoubtedly draw in lots of purchasers!
