How to position yourself for the bottom of Ethereum price and the start of a new uptrend | Cryptocurrency

  • Ethereum price is showing signs of recovery but confirmation is far from there.
  • On-chain metrics show investors recouping discounted ETH despite the looming threat of another leg down.
  • A weekly candlestick near the $1000 psychological level could trigger the second leg down.

Ethereum price has shown resilience over the past 24 hours, indicating buyers are coming. After the massive crash, ETH might try to recover some of its losses, but another drop seems to be in store if significant levels are breached.

The Fusion Update

Ethereum has been planning to move from its current proof-of-work (PoW) model to proof-of-stake (PoS) for years via the Merge upgrade. The implementation of this update on the ETH testnet on June 8 brought developers closer to the same on the Beacon chain, also known as the mainnet.

One obstacle that has arisen, however, is the difficulty bomb that was planted in the ETH blockchain in 2015.

A difficulty bomb is a way for developers to prevent validators or miners from sticking to the PoW model during or after the merge. This prevents any possibility of Ethereum mainchain forks.

While the beacon chain is backed for Merge’s upgrade, the difficulty bomb seems to have popped up. As a result, the developers decided to delay the bomb. As a continuation of this development, the developers have additionally released a new version of Geth v1.10.19. The aforementioned mandatory upgrade will delay the difficulty bomb by 700,000 blocks.

Regardless of bullish fundamentals, Ethereum price suffered a massive crash over the past quarter.

Is Ethereum Price Ready For A Trend Reversal?

Ethereum price has fallen 65% in the past six weeks and hit a new yearly low at $1,013. Following this catastrophic drop, ETH reversed important support levels at $2,324, $1,730 and $1,270 into a resistance barrier.

As of June 12, Ethereum price broke the $1,270 hurdle, but the recent 15% rally suggests buyers are buying ETH at discounted prices. A quick reversal of the $1,270 hurdle into a support level could be the key that triggers an impressive rebound to $1,730.

ETH/USDT 3-day chart

The change in trend here seems appropriate after a sharp sell-off; this will allow the sellers to pause, while the sidelined buyers and institutional investors will step in and accumulate, leading to a rapid recovery.

This thesis for Ethereum price is supported by the rising 7-day moving average of network growth from 63,000 to 73,000 over the past eight days. This 15% spike indicates user adoption and renewed investor confidence in ETH.

Growth of the EPF network

Growth of the EPF network

The accumulation of whales holding between 100 and 10,000 ETH further adds a tailwind to recovery prospects. The number of such investors has increased from 44,100 to 44,500 over the past eight days.

As seen in the price action, these holders are picking up ETH at discounted prices and betting on the rally to rally.

ETH supply distribution

ETH supply distribution

Although things are seemingly harmless considering a recovery rally, the thesis is based on the assumption that ETH price manages to topple the $1,270 hurdle in one foot. If buyers fail to rally or selling pressure continues to mount, this development may be unlikely. In such a case, the continuation of the downtrend seems more plausible.

The recent supply inflation of ETH present on the exchanges opposes the surge in the price of Ethereum, which rose from 15.87 million on June 11 to 16.36 million on June 16.

This index shows that around 500,000 ETH has been sent to centralized platforms that could potentially serve as sell-side pressure in the event of a flash crash.

Offer of ETH on exchanges

Offer of ETH on exchanges

Given these on-chain metrics and market conditions, there is also a possibility that the Ethereum price will continue its downtrend. If ETH sellers continue their unloading and break above the $1,000 psychological level, this will invalidate the recovery thesis and catalyze the second leg down.

This bearish move could push down the price of Ethereum to close the price inefficiency that extends to $661.

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How to position yourself for the bottom of Ethereum price and the start of a new uptrend | Cryptocurrency

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