Ethereum was among the worst cryptocurrencies in the week, at least among those with the highest capitalization. A suffering triggered by the bad time of Bitcoin, which however may have some deeper motivations which concerns the growing competition in the sector DeFi.
Solana, Algorand, Tezos: all the protocols that aim to nibble shares in the world of NFT and of decentralized finance instead they are experiencing a moment of great growth, financial and commercial distribution, a further cause for concern for investors in Ethereum.
Has the retreat begun? Absolutely not – and this will emerge clearly from ours analyses technical and fundamental, which will clarify what there is to know about Ethereum for the next few days. A phase of accumulation, which could open to a recovery towards all-time highs.
How to exploit this situation – Possible signs:
Ethereum in pain, but it is the cyclical nature of the market
The market for cryptocurrencies has changed a lot in the last few months. To the two classic cyclicals, that of Bitcoin which is then always followed by that of altcoin, a third has been added, namely that of protocols NFT And DeFi, who have been leading the market this past week.
Meantime Ethereum ended up flattening, albeit relatively, on the trend of Bitcoin, which as everyone knows in the last week has pulled the oars into the boat, with some difficulty in recovering from the flash crash which had caused fear for the worst. However, the fundamentals – which are the data we must look at to understand how the market will move in the medium and long term – remain very solid.
DeFi will be increasingly relevant
And although there is a massive growth of alternative projects such as Solana – to date the most threatening for the semi-monopoly of Ethereum – or how Algorand, in reality there is enough space to allow all projects to grow organically.
A momentary superior force of alternative projects need not be a source of concern for the fates of Ethereum. The DeFi world is still in its infancy and will grow, in the coming months and years, at important levels – and this will only push the value of ETH.
Last week’s technical problem caused more than a few concerns
The fork due to a bug left thousands of knots outside the network, which has raised more than a few concerns among investors, albeit spread over several days. In fact this problem is too completely returned and it is no longer a cause for concern.
Quite the contrary: it was a further demonstration of the fact that, even in the face of unexpected problems, Ethereum is resilient enough to return to its normal functioning within a few days. Without this then translating into an interruption of operations.
The burn is still proceeding apace
Since the introduction of the London Upgrade, that is from the EIP-1559, a huge amount of ETH was burned. At the time of writing, some have been burned 272,000+, for a value close to billion dollars. All this in the face of less than double emissions, with an impact on working capital new one of about 50%. This is a great sign for the world of Ethereum, which sees its go-to cryptocurrency to be increasingly scarce.
A movement that, in some phases of the week, has even become deflationary, with all that that entails in terms of scarcity on the market ETH. The flash crash of the last week is to be attributed, we repeat also in this circumstance, to speculative movements and mainly on the derivatives and not to a sell off on spot markets.
Flush of derivatives, which can help price stability
After flash crash the volumes of Open Interest futures have returned to levels that we can consider normal for Ethereum, as the infographic we attach here effectively demonstrates.
A situation that plastically describes what happened during the last major price loss for Ethereum, which actually hit all the major cryptocurrencies, except for those alternative projects that are pushing on gas thanks to news on the front. NFT. A normal situation that should reduce volatility in the coming hours and days.
A little technical analysis on Ethereum
In this situation, technical analysis can help us understand another piece of the puzzle of the future price of Ethereum. We will tune it up 1 week, thus having a sufficiently wide breath to evaluate the present situation of ETH.
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The moving averages are all positive, although the price is still relatively falling today and comes from one 7 days not exactly positive. Positive data that we must also cross with the main indicators.
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The prospect offered by the technical indicators is also excellent, once again signaling a strong positive trend expected over the week. For a present moment that would take the form, at this point, as pure collection.
In the medium and long term, no worries
Over the medium and long term Ethereum there are no worries whatsoever. Our Ethereum forecasts they are clear about it and we see no reason, at least for the moment, to revise them downwards.
While Ethereum’s rivals seem stronger right now, we believe they will have to continue to contend with monopoly almost total of ETH in this sector. Which may be reduced by extension, although always counterbalanced by the great growth of the DeFi and NFT sector.