Ether Battles Against $3,000 Mark: Can It Reclaim the Coveted $3,300 Level?
Summary:
Ether (ETH) is currently fighting against the $3,000 resistance level, following a 29.7% surge in mid-February. This growth is attributed to a decrease in supply, increased demand for staking, and the rise of decentralized finance applications. While crypto investor Ryan Sean Adams anticipates a 'demand season' for Ethereum, traders are eager to see if ETH can reclaim its $3,300 level last seen in March 2022. The potential introduction of a spot Ether exchange-traded fund could boost its price, especially with a decrease in the total number of circulating coins. However, the future prospects depend on several factors, including the correlation with Bitcoin prices, possible ETH supply on exchanges, other market catalysts, and investor sentiments.
Presently, Ether (ETH) is locked in a struggle with the $3,000 resistance mark, having achieved an outstanding increase of 29.7% from the 6th to the 20th of February. Experts credit this leap in ETH's value to a shrinking of available tokens, invoked by the surge in staking, augmentation of decentralized finance (DeFi) applications and an overall decrease in supply caused by the network's burn mechanism characteristic of proof-of-stake. Even though ETH's ascent to $3,000 has raised eyebrows, people are keen to see if this altcoin has the capacity to recuperate the desired $3,300 mark, last experience in March 2022.
Renowned crypto investor, Ryan Sean Adams posts on a social media platform, postulating that "Ethereum's demand season is yet to come". Adams proposes that the potential launch of a direct Ether exchange-traded fund (ETF) could fuel its price, especially considering the lack of "new supply". Records demonstrate a significant reduction of 18,960 ETH in total available coins in the past 30 days, as stated by ultrasound.money. It's crucial to mention that this measure doesn't represent the amount of ETH ready for sale, a metric which can be gauged through net deposits on exchanges.
Assessing the 7-day trend, net withdrawals have been favored since the 15th of February, a trend apt to change, as witnessed earlier in January. Against the odds, Ether's pricing remained fairly stable in the month leading up to the 5th of January at $2,300. These figures indicate that the sparking event for the sale wasn't linked to a price upsurge. Essentially, the interplay of staking and demand for ETH in DeFi apps doesn't seem to directly affect the supply ready for sale.
From a technical standpoint, the prospective approval of the ETF could ignite a price hike in Ether. Analysts predict the chances of approval to be somewhere between 50% and 80%, which could potentially lead to pleasant surprises. Yet, the chances of Ether solidifying over $3,300 decline if Bitcoin's positive energy falters, insinuating that inflows from institutional investors might not have enough traction to uplift its price. Also, the historical connection between BTC and ETH prices remains noteworthy.
The past trend doesn't confirm future behavior, particularly with the potential bullish energy from a direct Ethereum ETF, but significant decoupling between Bitcoin and Ether prices has been scarce in the past 9 months. Rather than obsessing over the projected ETF verdict in May, traders should consider other influencers such as demand for ETH from airdrop snapshots and the general demand of the Ethereum network.
As an exemplification, the excitement surrounding the forthcoming Ethereum token launches dimmed after the Starknet (STRK) airdrop, a greatly anticipated layer-2 token, fell about 60% since February 20. This fall was blamed on heavy selling pressure from airdrop seekers and fundamental Ethereum infrastructure companies like Nethermind. Moreover, criticism arose over participants considered ineligible for the distribution and disputes surrounding the release of 13% of the supply just two months after launch.
Assess whether professional traders are retaining an optimistic stance on Ether's price, as it vies with the $3,300 resistance, one should examine the price of ETH futures monthly contracts relative to regular spot markets. Under normal circumstances, these tools usually trade at a premium of 5% to 10% to adjust for their extended settlement period.
It's noteworthy that the Ether 1-month futures premium has persistently been above 14% since February 17, indicating an unwavering demand for leverage longs (buys). Additionally, although it indicates bullishness, there's no sign of exorbitant optimism like the 25% premium observed on January 2. The data indicates that Ether bullish traders shouldn't be overly worried about the supply on exchanges or the usage of leverage in futures markets, which solidifies the likelihood of ETH crossing the $3,300 threshold as plausible.
This article doesn't encompass investment advice or suggestions. Each investment and trading manoeuvre includes risk, hence readers ought to do their own research before making a decision.
Published At
2/22/2024 11:46:30 PM
Disclaimer: Algoine does not endorse any content or product on this page. Readers should conduct their own research before taking any actions related to the asset, company, or any information in this article and assume full responsibility for their decisions. This article should not be considered as investment advice. Our news is prepared with AI support.
Do you suspect this content may be misleading, incomplete, or inappropriate in any way, requiring modification or removal?
We appreciate your report.