Ethereum News: The combination of technical and fundamental indicators suggests that Ethereum may maintain its monthly bullish outlook despite the latest price correction. A good June is expected for Ethereum.

 

 

Ethereum (ETH) is down more than 40% as of June 1, after hitting a record high of $4,384 in May.

After the massive move to the downside in the world’s second-largest Cryptocurrency by market cap, many analysts are predicting further drops. For example, Clem Chambers, CEO of financial analysis portal ADFVN.com, said the recent ETH/USD drop looks like the beginning of the crypto crash before the more than 24,000% surge in 2018.

Ethereum rose more than 4,500% after bottoming out in March 2021, before wiping out almost 60 percent of its gains in just two weeks in May 2021. Chambers noted that ETH/USD remains at risk of falling lower, adding, “It may take three and a half years for it to regain its all-time high.”

Akash Girimath, finance correspondent at FXStreet, said ETH/USD could drop to $1,200, referring to Santiment’s 365-day Market Cap to Realized Value (MVRV) indicator. The index measures the profit/loss status of investors who have purchased ETH in the last 12 months.

The metrics also show that the number of investors holding a for-profit ETH portfolio has dropped after the May 19 price crash. This increased the likelihood that other traders (who were at a loss) would open their ETH positions, thus minimizing their downside risk in the event of a prolonged price drop.

However, although the pessimistic scenarios continue, narratives have also emerged that support the recovery expectations for the Ethereum price.

Major network upgrade in July

As the blockchain project prepares for the big network upgrade in July, investors still have a month to change their bias towards Ethereum.

The update, called Ethereum Improvement Proposal 1559 or EIP-1559, hopes to eliminate the high transaction fees that are the main problem of the Ethereum network. It will replace Ethereum’s “initial price action” fee model with a base network fee that will fluctuate based on network demand.

Vitalik Buterin and Eric Conner, authors of EIP-1559, predict that the protocol will create a more efficient transaction fee environment and simplify the GAS fee payment process for customers and decentralized application software.

Meanwhile, EIP-1559 also proposes to remove transaction fees, thereby bringing deflation to the Ethereum ecosystem. The impact on ETH prices could be similar to how the Bitcoin halving affected BTC/USD. Lower supply versus higher demand ultimately leads to higher prices.

However, some believe that EIP-1559 will not lead to a bullish run for ETH as it appears. Kyle Samani, managing partner of Multicoin Capital, argued that if ETH/USD rises, it will still be expensive to use Ethereum.

OKEx analyst Rick Delaney was also cautious when calling EIP-1559 “an all-encompassing bullish event for ETH.” Delaney stated that the proposal will make Ethereum attractive to wealthier investors.

“A potentially deflationary ETH – thanks to the fee-burning mechanism of EIP-1559 – could increase the asset’s attractiveness among the planet’s wealthiest investors,” Delaney said in April. said. “Similarly, the launch of staking as part of the ongoing upgrade to Ethereum 2.0 seems to be adding to the current increased demand.” said.

Decreased amount of Ethereum on exchanges

A recent Glassnode data shows that ETH continues to flow from cryptocurrency exchanges even after the 40% price drop.

The “Ethereum: Balance on Exchange — All Exchanges” metric showed that ETH reserves held in trading platforms’ hot wallets fell from 13.9 million on May 1 to 13.1 million on May 1. The drop rate is 5.75%.

Consistent ETH withdrawals suggested that traders want to hold crypto assets in anticipation of higher dollar-denominated returns in the future, or invest them in DeFi liquidity pools to generate consistent interest rate returns.

technical structure break

At least two independent analysts predict that Ether prices remain bullish on technical indicators.

PostyXBT predicted ETH/USD trading within an ascending triangle pattern, the first concrete structure formed after the pair corrected from $4,384 to $3,590.

Triangle pattern surfaces ideally during a bearish correction; should result in a move that continues to the negative side. PostyXBT expects the price to hold the triangle support while targeting the resistance trendline for the uptrend.

“There is nothing to bank and trade at the moment, I am just watching,” the analyst said. says.

“There is no reason for aggressive entries in these market conditions. The lower market invalidates the lower market.”

 

Crypto Cactus, another independent analyst,

It predicts a similar bullish outlook for Ethereum, except for spotting the cryptocurrency above the medium-term ascending trendline support as shown in the chart below.

Ethereum price prediction according to Crypto Cactus. Source: TradingView
Ethereum price prediction according to Crypto Cactus. Source: TradingView
The cautious analyst like PostyXBT noted that traders could enter a long position with a perfect retest of the current resistance trendline (the horizontal line near the $2,500 – $2,600 area).

“Although the spot moves interestingly enough, it still avoids leverage entirely,” he added.

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