With the Bitcoin price falling at the beginning of the week, it was not difficult to predict how the Ethereum price will react. Given the fact that the altcoin market is often dependent on Bitcoin thanks to high correlation, the price of ETH has since dropped close to 30 percent. However, for a cryptocurrency to perform well on price charts, it also requires the support of a strong network and the trust of the miner community.
At the moment, these two factors are very promising for ETH, and they make investors trust ETH’s long-term prospects. Currently, Ethereum miners are highly profitable. Glassnode’s data last week highlighted that Ethereum transaction fees can cover more than 50% of the total block reward. This has only happened in two major events, the first for the “DeFi summer” between August and October 2020 and to continue through most of 2021.
Although the price has endured several price corrections over the past few days, data from BitInfoCharts highlight that miner fees continue to hold a fairly high position compared to the last 6 months.
In addition, the Ethereum network continues to have a significantly high hash rate. The average daily hash rate reached another ATH at 416,083,7354 GH / s, showing that strong network foundations continue to support Ethereum, ignoring the recent price drop.
As these changes in the ETH market take place, so do new hodling models. According to data provided by Glassnode, the crypto throughput volume has reached an ATH of $ 46,637,330.84 and can see more ETH entering the cold storage, which can provide the cryptocurrency the most needed bullish momentum as the selling pressure decreases and accounts return. However, it was also interesting to note that addresses holding more than 100 cryptocurrencies reached their 8-month low and small addresses above 0.1 tokens reached an ATH of 4,147,382, pointing to minor changes in Ethereum’s user and investor demographics.
These aspects of Ethereum point to the possibility of an imminent recovery, and while highlighting the fact that recent price woes are not unique to ETH, but a symptom of the entire altcoin market, the cryptocurrency continues to be overshadowed by the price movements of BTC. The altcoin market has moved on the setting of Bitcoin for the majority of its existence, and this is unlikely to change anytime soon, even for assets like ETH, which are likely to continue to move under BTC’s dominance.
Market data from CoinMetrics highlighted the increased correlation ETH is registering with BTC. The correlation has dropped multiple times over the past months, starting in October 2020. However, the narrative is changing soon with the BTC-ETH correlation rising at the time of writing and is currently at 0.664. This makes it difficult to get a standalone bull for ETH and in the coming weeks, and as the trend remains unchanged, it’s not surprising that ETH is hitting price levels around $ 1,300. However, thanks to the aforementioned foundations currently supporting ETH, the $ 1,300 – $ 1,500 range is likely to be temporary and investors can expect the coin to move to current ATH in the coming months.