ETH is showing strong signs of recovery after a recent meltdown of the crypto market. The parity was restored after a near 10% growth surged ETH above $2,000. Impressively, it has been able to hold this position after plunging below $1,700 in the past week. What can we expect from the flagship alt coin?
Is this revival or not?
It surely looks like a revival for ETH. After dropping to despair, Ethereum has come back to life with a point to prove. It is fresh from a near 10% growth and into familiar territory in the $2k range. This is a vote of confidence for the ETH investors who were expecting big changes in this season.
The recent data is particularly bullish for Ethereum with the whales being full swing. One might say, the strong whale movements have been responsible for the upward movement of ETH.
Whale transactions have crossed 3,000 the past two days, through 11-12 May suggesting a developing trend for days to follow.
The surge in whale movements has caused a consequent hike in transaction volume on the Ethereum network. According to data from Santiment, the transaction volume has shown a dramatic increase recently with volumes crossing 9 million on 11 May and 13 million on 12 May.
The RSI is another indicator potentially pointing towards a tide reversal. In the past 24 hours, the index value of RSI has surged to 40.5 from an oversold region of 19. As the RSI consolidates around this region, there is increasingly likelihood of a surge in prices for ETH soon enough.
Let’s hear it from the experts
Mark Cuban, the billionaire Shark Tank investor warned investors while talking to Fortune as he said,
“Don’t go overboard on crypto. Stocks are going through the exact same thing. When money is cheap, people have to put it somewhere and search for returns. When it’s no longer cheap and prices start to go down, people try to protect their gains.”
TA: Ethereum Forms Bullish Pattern But This Level Is Crucial
Ethereum extended decline and tested the $1,920 support against the US Dollar. ETH is rising and might revisit the key $2,085 resistance zone.
- Ethereum remained stable above the key $1,920 support zone.
- The price is now trading above $2,000 and the 100 hourly simple moving average.
- There was a break above a major bearish trend line with resistance near $1,980 on the hourly chart of ETH/USD (data feed via Kraken).
- The pair could rise further, but the $2,085 zone presents a major hurdle.
Ethereum Price Recovers Above $2K
Ethereum extended decline after it broke the $1,950 support and the 100 hourly simple moving average. However, the bulls took a strong stand near the $1,920 support.
A low was formed near $1,911 and the price started a recovery wave. There was a clear move above the $1,950 and $1,960 resistance levels. Ether price climbed above the 50% Fib retracement level of the downward move from the $2,083 swing high to $1,911 low.
Besides, there was a break above a major bearish trend line with resistance near $1,980 on the hourly chart of ETH/USD. Ether price is now trading above $2,000 and the 100 hourly simple moving average.
The price is now facing resistance near the $2,020 level. It is near the 61.8% Fib retracement level of the downward move from the $2,083 swing high to $1,911 low. The next major resistance is near the $2,040 level. The main resistance is now forming near the $2,085 level. A close above the $2,085 level could open the doors for a steady increase.
Source: ETHUSD on TradingView.com
In the stated case, ether price could rally towards the $2,200 resistance. Any more gains may perhaps send it towards the key $2,250 resistance zone.
Fresh Decline in ETH?
If ethereum fails to recover above the $2,400 resistance, it could start a fresh decline. An initial support on the downside is near the $1,995 zone and the 100 hourly SMA.
The next major support is near the $1,970 level. A downside break below the $1,970 level might call for another test of the main $1,920 support. Any more losses may perhaps clear the path for a sharp decline to $1,800.
Hourly MACD – The MACD for ETH/USD is now losing momentum in the bullish zone.
Hourly RSI – The RSI for ETH/USD is now above the 50 level.
Major Support Level – $1,970
Major Resistance Level – $2,085
Investors May Expect Downside For Bitcoin And Ethereum Market For The Next 3 Months
The crypto markets have accepted the depegging of UST and the subsequent downward spiral of LUNA, both of which impacted the price of Bitcoin and the entire digital asset spectrum. According to a recent report by the Glassnode team, the Bitcoin market has been trading lower for eight weeks, making it the ‘longest continuous series of red weekly candles in history.’
Even Ethereum, the most popular altcoin, painted a similar picture. Bearish fluctuations damage returns and profit margins directly or indirectly.
To make matters worse, derivative markets forecast shows more declines in the coming three to six months.
Derivative Markets Hint At More Pain For Bitcoin
According to derivative markets, the prognosis for the next three to six months remains fearful of further fall. On-chain, the report stated that blockspace demand for Ethereum and Bitcoin has dropped to multi-year lows, and the rate of ETH burning via EIP1559 has reached an all-time low.
Glassnode calculated that the demand side will continue to face headwinds due to poor price performance, uncertain derivatives pricing, and extremely low demand for block-space on both Bitcoin and Ethereum.
The report explains:
Looking on-chain, we can see that both Ethereum and Bitcoin blockspace demand has fallen to multi-year lows, and the rate of burning of ETH via EIP1559 is now at an all-time-low.
Coupling poor price performance, fearful derivatives pricing, and exceedingly lacklustre demand for block-space on both Bitcoin and Ethereum, we can deduce that the demand side is likely to continue seeing headwinds.
Both Bitcoin and Ethereum’s price performance over the last 12 months has been disappointing. Long-term CAGR rates for Bitcoin and Ethereum have been impacted as a result of this.
BTC, the largest cryptocurrency, moved in a roughly 4-year bull/bear cycle, which was frequently accompanied with halving events. When looking at long-term returns, the CAGR has dropped from almost 200 percent in 2015 to less than 50 percent as of this writing.
Related Reading | New Data Shows China Still Controls 21% Of The Global Bitcoin Mining Hashrate
Furthermore, Bitcoin had a negative 30% return over the short term, implying that it corrected by 1% every day on average. This negative return for Bitcoin is very similar to prior bear market cycles.
When it comes to ETH, the altcoin performed far worse than BTC. Ethereum’s monthly return profile revealed a depressing picture of -34.9 percent. Ethereum likewise appears to be seeing diminishing rewards in the long run.
Furthermore, during the previous 12 months, the 4-year CAGR for both assets has dropped from 100% to only 36% for BTC. Also, ETH is up 28 percent per year, emphasizing the severity of this bear.
To make matters worse, the derivative market warned of future market declines. Near-term uncertainty and downside risk continue to be priced into options markets, particularly over the next three to six months. In reality, during the market sell-off last week, implied volatility increased significantly.
Total crypto market cap stands at $1.2 Trillion. Source: TradingView
The Glassnode analysis concluded by stating that the present bear market has taken its toll on crypto traders and investors. Furthermore, the Glassnode team emphasized that downturn markets frequently worsen before improving. However, ‘bear markets do have a tendency of ending’ and ‘bear markets author the bull that follows,’ so there is some light at the end of the tunnel.
Related Reading | TA: Bitcoin Price Stuck In Key Range, Why Dips Might Be Limited
Featured image from iStockPhoto, Charts from Glassnode, and TradingView.com
Institutional Investors Seek Safe Haven In Crypto Products Amid Market Uncertainty
Institutional investors have been a big part of the crypto market ever since they started investing in the market. Just like every other investors, institutional investors are not immune from the wild price fluctuations that characterizes the crypto market. This has resulted in big money looking for safe havens to move their money into while the worst of the market blows over. Sometimes, they turn to altcoins but this time around seem to have fond better luck with crypto products.
Outflows Rock Market
The recent recovery of the crypto market has been rocked once more by outflows. As prices had recovered, more investors had chosen to take profits and this had lead to more outflows. The previous week saw these outflows from digital investment products grow as high as $141 million in a single week, one of the largest in 2022. This had seen the total assets under management (AuM) decline towards one-year lows, now sitting at $38 billion. The last time AuM was this low had been in July 2021.
Related Reading | LUNA Records 100% Growth In A Single Day. More Upside Coming?
Both Bitcoin and altcoins were not spared the onslaught. For the pioneer cryptocurrency, the inflow trend from the previous week had been swiftly reversed. It instead saw outflows totaling $154 million in a single week, making it the largest loser from last week. In the same vein, Ethereum had also followed in the footsteps of bitcoin with outflows reaching $0.3 million.
Other altcoins would not follow this trend though. Digital assets such as Cardano and Polkadot have been making their way into the radar of institutional investors and this saw both asset bring in $1 million in inflows respectively.
Crypto market cap drops to $1.239 trillion | Source: Crypto Total Market Cap on TradingView.com
Blockchain equity investment products would suffer the same fate as Bitcoin and Ethereum and outflows had reached $20 million. This followed the recent trend of broad sell-off in equities that had seen more investors move out of them.
Multi-Crypto Products Provide HavenB
With so much bad news floating around the market, institutional investors have sought refuge in other places besides directly investing in cryptocurrencies. What they have landed on have been the multi-crypto investment products which have emerged the recent winners for last week.
These multi-crypto investment products saw inflows totaling $9.7 million for last week alone. This has brought the total assets under management to $185 million for multi-crypto investment products, while the total inflows make up 5.3% on a year-to-date basis.
Related Reading | Long Liquidations Continue To Rock Market As Bitcoin Struggles To Settle Above $30,000
It remains one of the best performing when compared to its other counterparts. While others have seen countless weeks of outflows in 2022 so far, there have been only two weeks where multi-crypto investment products had recorded outflows, making it a safer bet for institutional investors during times of market uncertainty.
Nevertheless, year-to-date and month-to-date net flows remain positive for bitcoin. It currently sits at $307 million and $187 million respectively. Although $1.1 million had left the market as a result of outflows from short bitcoin.
Featured image from Moneycentral, chart from TradingView.com
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