Is Ethereum support ready to drop?

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Last week, Ethereum was trading in a range of $ 1,600 to $ 1,750. However, many indicators seem to prove this this support remains fragile and it may soon give up under pressure from sellers. Refunds of up to $ 1,200 will then be considered.

Ethereum in strong recovery

Ethereum sees better days for a few weeks. Its price is 60% increase from May 3rd and clearly outperforms its longtime rival Bitcoin. This price hike is partly due to the upcoming Fusion, which for now will be announced on September 19th.

This will change the Ethereum network from a Proof-of-Work mechanism to a Proof-Ok-Stake mechanism. whets the appetite of many investors. After various tests on many Ethereum testnets have been successful, the optimism is justified. This is expected by many analysts. Ethereum supply plummeted by nearly 90% caused by this strong buying pressure on the token !

Another positive aspect for the network, all frozen assets, TVL for total value blocked, took advantage of the collapse of the Earth ecosystem to welcome new funds. In this way, Ethereum consolidates its place asthe undisputed leader of decentralized finance almost since then 59% of the total TVL DeFi, up 51% since May 3, according to Defillama.com.

TVL distribution via blockchain (Source: Defillama.com)

However, it should be borne in mind that Many of these resources have melted like snow in the sun. after the recent cryptocurrency crash. The blocked amount for Ethereum smart contracts was 100 billion in December 2021This is just 40 billion today… Likewise, the average cost of gasoline dropped to $ 0.90 from $ 7.50 at the start of the month. An indication that the network is no longer congested because it attracts fewer users.

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Traders waiting and cautious

To get a little clearer idea of ​​market sentiment, it is always interesting to look at the derivatives markets. One of the first indicators we can find is “delta slope“. When traders expect the price of an asset to rise, this indicator drops below -12%. On the other hand, when it exceeds 12%, it is often a sign of a bearish trend.

Currently, we are under 12% after exceeding 30% in mid-June. That’s why there are resellers. quite confident to continue the movement of the ether.

Another indicator that can be particularly useful for monitoring market sentiment is leveraged markets. This practice allows traders to have more capital thanks to leverage. A riskier practice that should be reserved for professionals in the sector. Bitfinex is a reputable exchange provide a fairly detailed overview of that particular market on large accounts with large positions captured by merchants and whales. We set the peak of long positions, or purchases, on July 2nd from 500,000 ETH is the highest level since November 2021..

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These positions have recently been abolished at the support level of $ 1600. Traders seem to be afraid possible downward movement and therefore limited their long exposure as best as possible protect yourself in case of another fall. If this support breaks down, Ethereum will definitely fall back into the lower part of the previous range, that is area $ 1200, the former resistance, successfully overcome in mid-July. In this regard, the market as a whole is particularly difficult to understand. The indicators do not give an exact direction.

Except for economic context but in general geopolitics remains particularly stressful and many observers predict that by the end of the year there will be much more turbulence in both cryptocurrency and traditional markets. However, as already mentioned, The merger should allow Ethereum to perform well at least for now. If all goes according to the plans of the leading smart contract provider, it will be strong market signal which is sure to attract many buyers!

To learn more about merger and investment strategies, check out our article here.

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