- Ethereum’s current on-chain metrics provide a 50:50 probability of ETH going either way
- However, similarities between the 2017/18 cycle and the current environment, point towards a dip by Ethereum
- Ethereum has also printed a rising wedge pattern that provides further proof of a pending pullback to lower levels of $1,750
- Implementation of EIP1559 could be a ‘sell the news event’ but time will tell
This is according to a report shared by the team at Santiment which highlighted the following regarding the on-chain metrics working behind the scenes to determine the price of Ethereum.
- Ethereum’s MVRV (market value to realized value) indicates that long-term holders are still in profit and are yet to feel the pain of ETH’s pullback from its most recent all-time high of $4,372
- Ethereum’s supply on exchanges is at a one year low thus reducing the possibilities of selling pressure
- Daily active addresses on the Ethereum network remain high indicating a healthy network
- However, network growth in terms of new addresses has failed to break previous 2017/18 all-time highs
- Ethereum’s price action continues to mimic 2017/18 and the subsequent ‘popping of the bubble’
- Ethereum is also contending with other networks such as Binance Coin, Polygon and Fantom due to lower transaction fees
Ethereum Prints a Rising Wedge That Could Cause a Pullback to $1,750
With respect to technical analysis, the team at Santiment has identified an ongoing rising wedge on the Ethereum chart that foreshadows a price dip to $1,750. Their analysis can be found in the following statement and accompanying chart.
After bouncing off the $1750 levels in late June, ETH appears to have formed a rising wedge…which is usually a bearish sign for continuation of prevailing trend.
Given that the overall trend is bearish, it’s very likely to break down from the rising wedge and continue towards breaking the $1750 levels.
EIP1559 Could Cause a Bounce, But It Might be a Dead Cat Bounce
In the concluding remarks of the elaborate report, the team at Santiment went on to caution that Ethereum could experience a dead cat bounce leading up to, or after the implementation of EIP1559. They explained this scenario as follows.
It’s all speculative at the moment and no one will really know how the market will react to the implementation [of EIP1559]. It could be “buy the rumour, sell the news”.
At the end of the day…. once the money making opportunities dry out (be it in degen coins or legit projects), participants will eventually leave, just like what we seen in 2017/18’s cycle….
In summary…ETH’s price action isn’t looking all that good, setting it at risk of yet another leg down. But if we do get a bounce, it could be a dead cat one if nothing changes.
[Photo by Zoltan Tasi on Unsplash]
Ray Schuetz received a Masters Degree in computer science from The University of Texas (Austin). Ray has been working as a full-time blockchain consultant for the past 3 years. In his spare time, Ray enjoys writing for EthereumCryptocurrency.com and other crypto news publications.