Ethereum has been going through a tough time over the past year as prices plummeted quite severely, leaving many investors struggling to make sense of the situation. Most were worried about losing all of their capital and chose to sell all their assets as a means of preventing further capital loss. However, those who decided to keep their holdings intact had reason to rejoice as the Ethereum price began climbing again.
However, it’ll still be a while until cryptocurrencies can return to their 2021 levels, especially as the market is not yet entirely foolproof.
Market data
Cryptocurrencies are famously known for their volatility, with prices fluctuating considerably, sometimes over the course of the same day. That makes predicting future prices quite a problematic endeavor and something which has deterred many from adding digital coins to their list of holdings. The permanent uncertainty leads to many feeling that they can’t be in complete control of their assets, so they don’t even attempt to invest.
Yet, that doesn’t mean that many researchers and analysts haven’t attempted to make sense of the fluctuations within the crypto market and come up with predictions that can offer some general guidelines for traders. And while some believe that they’re hardly ever reliable, others swear by them. Given the latest price surges, there’s been increasing conversation within the market niche that the conditions are perfect for the emergence of a bullish rally.
However, while many expected that the price would soon surge to $2,000, or perhaps even higher, it seems there’ll still be some time until that goal is achieved. Recent market data shows that there are several factors Ethereum must overcome before recording a notable price increase, including macroeconomic troubles, weaker demand for DApps on the ETH blockchain, as well as the ongoing propensity for regulations.
Macroeconomics
The relationship between digital assets and the traditional financial market remains controversial, as many believe that the two shouldn’t be merged. In contrast, others are certain only positive things could arise from the association. Asset management companies believe the United States might still face a significant financial downturn towards or during the fourth quarter after narrowly avoiding a default on its debt earlier this year.
This dire situation would hypothetically be followed by further economic contractions, as well as widespread recessions in Europe throughout 2024. The bleak scenario also involves corporate defaults, showing a complicated situation with many adverse conditions. As central banks are likely to continue shifting the interest rates, the time during which these movements were initially predicted to occur will become longer. This adds further strain on the economy and might be an opportunity for the crypto market to develop further.
Gas fees
In the Ethereum blockchain, gas fees are the costs of conducting transactions and executing contracts. The fees act as compensation for the computational power necessary to support the network and all interactions that are part of it. The prices associated with these fees became quite steep earlier this year, leading many investors to temporarily avoid placing further transactions.
Currently, the situation is quite different, and gas fees have plummeted by over 60%. Just weeks prior, the average cost for seven transaction days was around $9. Now, it is $3.7, a considerable drop primarily associated with the declining use of decentralized applications and features. DApp addresses have dropped by close to 30% during this time.
Interestingly, non-fungible tokens seem to enjoy some time in the spotlight, as marketplaces recorded a surge in active wallets. The figures pertaining to deposits in smart contracts have reached their lowest levels over the past three years. This is an exceptionally unfavorable piece of news, as the higher the TVL is, the more reliable a platform is taken to be.
Buying signals
However, many point out that Ethereum’s outlook still looks largely positive despite these challenges. The indicators still appear to suggest a more bullish outlook, and data shows that the coin is still on an ascending triangle. The figures show three equal highs so far. According to analysis, this technical formation forecasts an ascent of nearly 50% following a breakout. The measure is derived from measuring the distance between the swing low and high and then adding it to the resistance point a little below $1,900.
In order to commence on a bullish path, the Ethereum coin needs to overcome this barrier. Nonetheless, it seems like bear investors are still on the winning side for the time being. It’s likely that the situation will change soon enough, however, and that the prices will begin to climb. Until then, investors must make sure they take care of their portfolios and acquire crypto while the price is still relatively low. Later, they’ll be able to sell it for a higher price, therefore generating a large amount of profit.
Whale transactions
One of the most noteworthy transactions within the crypto world occurs when a whale starts a transaction. These investors own large amounts of capital, and all their ventures are typically so massive that they have a lasting effect on the market. Investors are usually wary of these movements, as they tend to precede a price drop. This seems to be the case for the latest fall in the Ethereum price.
A whale’s sell-off is believed to have triggered a decline, as the unknown investor deposited 25,000 ETH on an exchange. The approximate value is around $47.24 million. Twelve hours later, the same investor withdrew around 15.9 million. This investor has managed to maintain a spotless win rate within the blockchain. However, the strategy, while undoubtedly profitable for the individual investor, is problematic for the smaller traders, who have felt the downward pressure.
To sum up, the resistance Ethereum has to overcome to achieve the $2,000 goal remains quite considerable. The continuing regulatory movements have caused many investors to stay cautious and keep their expectations low. While that doesn’t mean that positive change won’t soon be achieved, it means that the market has an additional hurdle on its path before attaining its true potential.
