Ethereum network has been growing at a much higher rate as compared to Bitcoin because of their scalability features. Being a decentralized cryptocurrency with the ability to offer smart contracts has been at the forefront of ETH. It is perhaps one of the most important reasons that can eclipse Bitcoin.
Whether it be the smaller transaction fees, scalability, or smart contracts, Ethereum is set to explode in the years to come. Considering the modifications and adaptability of this cryptocurrency we will possibly be witnessing it surpass BTC in the next few years. For comparison consider the block validation of time of 12 seconds for ETC with 10 minutes on BTC.
The benefits of Ethereum far exceed other cryptocurrencies as it has enabled other developers to create several crypto tokens such as ERC20, ERC721, and DAO. Hence Ethereum momentum is not just limited to one aspect. Since it works on the proof of work concept is a rewarding aspect for crypto miners who are awarded incentives for validating transactions, thus contributing towards scaling the ETH network just like the BTC network.
Why should you be worried?
Despite its potential to overthrow Bitcoin as the market leader, BTC, ETH is quite related. The unlocking of the largest grayscale market premium on July 17, 2021 has become a major source of worry for investors and crypto enthusiasts, which can either lead towards another session of profit booking out of fear or push the market lower when those contracts are released.
Let’s take a look at the performance of Ethereum and its technical analysis.
Ethereum Technical Analysis
Ethereum has been struggling to hold its gains on daily charts. Whenever it tries to retrace some of its lost valuations, it is immediately pushed back by consistent followed-up profit bookings. After failing to cross the resistance of $2850, ETH took support at the $2300 levels for more than a month before succumbing to the selling and negative sentiment around cryptocurrencies.
Although Ethereum is still trading at a 60% premium to January 01, 2021 valuations, the fall from $4380 to $1700 is not something to be ignored. Your brain may tease you with the small annual profits it is showing and the huge, year on year returns, but the fact that it is weaker to the tune of 60% is a major source of worry.
On daily charts, the weakness is further substantiated by the recent profit booking from close to the immediate resistance levels. Failure to close above $2330 pushed ETH back towards the lower supports. After taking support twice from the $1700 levels will it be able to turn tables or will it succumb to the selling pressure, is the biggest tussle in every ETH enthusiast’s mind.
MACD is also showing a clear red histogram marking the beginning of a new swing of negativity. Concerning the 36% gain and retracement from recent lows of $1700, the continuation of the current swing will push ETH down to lower levels. While this technical analysis is immune from the Grayscale market news, the impact cannot be judged.
One will have to wait and watch while the grayscale contracts unlock. We recommend sitting idle for some time to clear the fog around the price action. It will be extremely risky to make positions before such an international event.
On hourly charts, we are witnessing a very long negative session without any pullback in between. ETH has been falling since breaching the resistance of $2360 on hourly charts on the 7th of July 2021. The consistent selling on ETH for the last eight days halted a smaller buying momentum today. Although the volumes are quite low, RSI increasing from oversold zones towards overbought zones has brought back some positivity.
Ethereum is too weak for investing at current valuations and in a trending market, a wrong move can severely drain your investment value. Based on our ETH price prediction, it will be wiser to book some profits and let this situation subside. But if you have a risky trading style entry should be made before the support levels of $1700 and that should be considered as a stop loss. Crossing below $1700 on daily charts with increased volumes should be a sign of stopping new investments till better clarity is achieved.