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Ethereum Nears All-Time High Despite Alarming Bearish Signals

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Ethereum rose on Tuesday, partially because of its positive correlation with Bitcoin, the top cryptocurrency that also notched gains, and partially because the Chicago Mercantile Exchange will offer Ethereum Futures effectively from February 8, 2021.

Trades flocked into the second-largest cryptocurrency during the early European session, pushing its prices against the US dollar up by 6.07 percent to a week-to-date high of $1,458. That is just $19 shy of its recently-established record level.

Technical chartists highlighted Ethereum’s latest upside move to validate a bullish pattern known as the Ascending Channel. Crypto YouTuber Lark David presented a diagram that showed ETH/USD maintaining a short-term price ceiling with a horizontal trendline.

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Meanwhile, the analyst also noted a sequence of lower highs forming beneath the horizontal resistance, presenting it as a super-bullish outlook for Ethereum.

Ethereum, ETHUSD, ETHBTC, ETHUSDT, cryptocurrency
Ethereum tests the upper trendline of the so-called Ascending Channel pattern for a breakout move, according to Lark Davis. Source: ETHUSD on TradingView.com
Ethereum tests the upper trendline of the so-called Ascending Channel pattern for a breakout move, according to Lark Davis. Source: ETHUSD on TradingView.com

Per the technical description, the breakout target of Ethereum’s Ascending Triangle chart stands over $2,000.

But…

Ethereum’s latest upside move alarmed about a growing bearish divergence outlook on a daily timeframe chart.

So it appears, the ETH/USD exchange rate rose in defiance of its falling volume and depreciating momentum. Technically, it risked slowing down the prevailing uptrend at one point in time, which may follow up with a deeper retracement downwards.

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Ethereum, ETHUSD, ETHBTC, ETHUSDT, cryptocurrency
Ethereum bearish divergence risks sending its prices lower. Source: ETHUSD on TradingView.com
Ethereum bearish divergence risks sending its prices lower. Source: ETHUSD on TradingView.com

Meanwhile, a twisted version of the Descending Triangle pattern showed Ethereum trading inside a Falling Wedge structure. In retrospect, a Falling Wedge is a bearish reversal pattern that forms after an asset forms a sequence of higher highs and lower highs inside a contracting channel.

After or ahead of hitting the apex—the point where the two trendlines converge—the asset falls lower by as much as the Wedge’s maximum height. That puts ETH/USD at risk of plunging to mid-$1,000.

The bearish analogy somewhat matches the divergence, as discussed above. For now, it remains the only short-term technical barrier between Ethereum and a $2,000-valuation.

Long-term Scenario for Ethereum

A correction could prompt ETH/USD to retest its 50-day simple moving average wave (blue) near $1,025—almost in line with the Wedge target. Bulls could find the level attractive enough to increase their spot long positions, causing a rebound.

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The ETH/USD exchange rate could then attempt a breakout move towards its 20-day simple moving average (green) and continue moving upward should the fundamentals agree.

Ryan Selkis of Messari brings one bullish catalyst to the forefront.

As per the researcher, Ethereum could attain more adoption from mainstream traders and investors after the recent WallStreetFrenzy fiasco. In retrospect, trading platform Robinhood had halted the trading of heavily-shorted stocks after an army of individual daytraders started making bullish bets on them.

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“Buy bitcoin to hedge against inflation, and potentially make a lot of money, but also to tell your government to f*ck off,” wrote Mr. Selkis. “Buy ethereum to secure the fledging decentralized financial system and potentially make a lot of money, but also to tell your bank to f*ck off.”

“Buy DeFi assets to boost liquidity, additional investment in better financial infrastructure, and potentially to make a lot of money, but also to tell your brokerage, lender, or asset manager to f*ck off,” he added.

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Ethereum

Ethereum competitor Near launches $800M developer fund as DeFi competition heats up

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Smart contract ecosystem Near Protocol has earmarked $800 million for new funding initiatives aimed at growing its decentralized finance capabilities, offering the latest evidence that the highly lucrative DeFi market is still in its infancy. 

The new funding, which includes the $350 million grants program announced by Proximity Labs last week, gives ecosystem developers added incentive to create new product offerings on Near, the company announced Monday.

Roughly $250 million will be allocated to existing ecosystem developers; another $100 million is earmarked for startup grants, with Near planning to fund more than 20 startups at a rate of $5 million each. The remaining $100 million will be spent on so-called regional funds across Asia, Europe and the United States.

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Value locked in DeFi protocols has surged 936% over the past year, with Ethereum competitors such as Binance Smart Chain, Solana and Avalanche seeing considerable uptake, according to data from DappRadar. Ethereum projects account for roughly 66% of the total value locked across DeFi, according to industry sources.

Despite Ethereum’s overwhelming dominance, the DeFi market is growing at a torrid pace and is currently valued at over $247 billion — leaving plenty of room for competing platforms to capitalize. One year ago, the total value locked in DeFi projects was less than $13 billion.

Near accounts for a tiny sliver of the total DeFi market, but that could soon change as more developers tap into the new funding campaigns and users continue to search for alternatives to Ethereum-based protocols. As Cointelegraph recently reported, Ethereum’s competitors have seen an influx of users fleeing the high fees on the ETH network.

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$2 Billion Worth of Ethereum Burned Since August

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$2 billion worth of Ethereum could have been dumped on the market, but thanks to EIP-1559 it has been burned

Due to the rapid growth of the cryptocurrency market and the popularity of the NFT and DeFi industries, the Ethereum network reaches another milestone: more than $2 billion worth of Ethereum has been burned recently. The significant USD value of the burned tokens is also followed by a recent 15% price increase.

Ethereum burn rate

With the implementation of the EIP-1559 update, the fee-burning mechanism has been introduced to the network. Since then, Ethereum mining rewards are getting burned instead of going directly to miners’ pockets.

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Ethereum burns
Source: Dune Analytics

With network load increasing due to the popularity of the DeFi and NFT industries, the burning rate is moving up gradually with 616,000 Ethereum burned while a little bit over one million ETH have been minted.

At the current pace, the Ethereum burn rate remains at 0.58 with more Ethereum burned than earned by miners. If the network remains in the same condition until around the year 2023, Ethereum will become a deflationary coin, which means that the circulating supply will start to decrease progressively.

Effect on the price

While deflationary blocks are not something new, various fund managers and wealthy investors have expressed their feelings about the future of the coin by predicting that it will remain growing due to the constant reduction of the supply.

Ethereum daily chart
Source: TradingView

At press time, Ethereum is trading at $4,145, after reaching the previous ATH of $4,380 on Oct. 21. Cryptocurrency traders and investors have not yet moved Ether past the previous high, leaving it hanging close to the local peak.

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Ethereum Price Analysis: ETH still holds below $4,200, swift breakout to follow today?

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  • Ethereum price analysis is bullish today.
  • ETH/USD set a higher low at $4,000 yesterday.
  • Ethereum looking to break $4,200 today.

Ethereum price analysis is bullish today as another higher low was set yesterday, leading to a move higher overnight. Therefore, we expect ETH/USD to continue higher and break the $4,200 mark later today.

Ethereum Price Analysis: ETH still holds below $4,200, swift breakout to follow today? 1
Cryptocurrency heat map. Source: Coin360

The cryptocurrency market traded in the green over the last 24 hours, with Bitcoin up by 3.36 percent. Meanwhile, Ethereum gained 1.32 percent, while Solana (SOL) is the top performer with an 8 percent gain.

Ethereum price movement in the last 24 hours: Ethereum sets higher low at $4,000, returns below $4,200 resistance

ETH/USD traded in a range of $3,967.12 – $4,175.12, indicating substantial volatility over the last 24 hours. Trading volume has increased by 13.58 percent and totals $16.559 billion, while the total market cap trades around $488.65 billion, resulting in market dominance of 18.82 percent.

ETH/USD 4-hour chart: ETH ready to break $4,200?

On the 4-hour chart, we can see bullish momentum strong today as the $4,200 mark gets tested again.

Ethereum Price Analysis: ETH still holds below $4,200, breakout to follow today?
ETH/USD 4-hour chart. Source: TradingView

Ethereum price action has seen a strong performance so far in October. After breaking out of a more than week-long consolidation on the 1st of October, a strong advance followed until the first resistance at $3,650.

Over th next weeks, two further waves higher were set. The first one took ETH/USD to just under $4,000, while the second one all-the-way to the previous all-time high at $4,400.

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Since then, the Ethereum price has retraced again. Previous swing highs were retested over the weekend, with support found at $3,900. Yesterday, ETH/USD moved to $4,200, with no further upside seen, leading to another retracement. 

Another higher low was set, pushing ETH back to $4,200 earlier today, which will likely lead to more upside over the next 24 hours.

Ethereum Price Analysis: Conclusion 

Ethereum price analysis is bullish as a new high thigh was set yesterday, leading ETH back to the $4,200 local resistance. Therefore, we expect ETH/USD to break higher over the next 24 hours.

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While waiting for Ethereum to move further, read our guides on LTC wallets, Gero wallets, and  DeFi wallets.

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