Ethereum: Why Now’s the Time to Buy More
According to founder Vitalik Buterin, the Ethereum (CRYPTO:ETH) network is on the verge of a dramatic technological revolution. One year from now, Ethereum will transition into a proof-of-stake (PoS) network where investors will be able to earn interest from validating blockchain transactions with their coins (known as staking), execute digital interparty agreements (smart contracts) at record speed, and use far less electricity when utilizing the network. The upcoming Ethereum 2.0 network upgrade is a massive overhaul from the current slow and inefficient network.
But the potential for reduction of fees to execute those smart contracts – or what is referred to as gas fees in the crypto community – is what makes Ethereum look like such a good buying opportunity right now. Let’s look at how this is a game changer and why, among other elements, it makes Ethereum an ideal investment to buy now.
High barrier to decentralized finance
Nowadays, Ethereum powers pretty much everything in the $196 billion decentralized finance (DeFi) space, including borrowing and lending, high-yield cryptocurrency savings accounts, peer-to-peer software, the trading of certificates of digital asset ownership (e.g. in the case of non-fungible tokens), and coin swaps. Most DeFi platforms that offer such services issue their own tokens, but they are based on the Ethereum blockchain, known as ERC-20, thanks to its ability to power smart contracts.
That brings up a pretty significant problem: high gas fees. Right now, the Ethereum network can only process about 15 transactions per second. These are just regular transactions, like sending money from point A to point B.
On the other hand, smart contracts take up much more data to store on the blockchain and require more consideration in the form of gas fees from users for processing. Furthermore, like in the service industry, investors can provide a “gas tip” for better/faster service (transaction processing), further driving up gas fees.
Take the example of NFTs. Right now, it can cost as much as $150 in gas fees to mint a new NFT for sale. There are more extreme examples. In July, when Mila Kunis auctioned 10,000 of her animated series Stoner Cats NFTs, investors rushed to purchase them. The Ethereum network got so overloaded it caused gas prices to soar to hundreds of dollars apiece. Keep in mind that investors themselves are also paying about $20 on an average day in gas fees to purchase each NFT. That steep $20 per day is because NFTs are a smart contract – they bind the buyer with the NFT and the seller with the payment, and its processing takes up space on the blockchain and requires consideration to execute.
In addition, taking out a crypto asset loan these days is quite expensive. For example, it costs close to $80 to deposit collateral on a DeFi lending platform and an additional $80 to withdraw. Again, these high base rates mean that investors need to deposit a large sum of money to earn a meaningful fixed income or take out a huge loan so it’s worth the costs.
Ethereum 2.0 to the rescue
Luckily, the launch of Ethereum 2.0 would definitively lower these gas fees to an near-zero levels, making it easier for people to access DeFi services. Indeed, Buterin plans to scale ERC-20 to the point where it can process more than 100,000 transactions per second. With all this friction to DeFi about to go away, I highly recommend investors increase their stake in the promising coin.
Three reasons why Ethereum price is going to $5,000
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Ethereum price has breached a bull flag pattern, forecasting a $4,816 target.
Transactional data shows entry into the price discovery phase is closer than anticipated.
ETH dominance chart adds credence and hints at an explosive rally.
Ethereum price breached a crucial barrier, kick-starting a part of the massive uptrend that awaits it. While the short-term outlook for ETH might be concerning based on some metrics, others indicate that the long-term scenario remains largely bullish.
Ethereum price consolidates to move higher
Ethereum price is currently forming a bull flag. ETH rose 134% between July 20 and September 3, creating a flagpole. However, it consolidated soon after in a downward sloping channel, setting up the flag.
This pattern forecasts a 57% ascent, obtained by measuring the flagpole’s height and adding it to the breakout point. A decisive close above the flag’s upper trend line projects a target of $4,816.
On October 1, Ethereum price embarked on a 17% rally but is currently experiencing a slowdown as it encounters the $3,398 supply barrier. Investors should note that there is a chance for ETH to retrace to $3,202 before rallying higher.
Regardless of a correction, if ETH continues to climb, the barriers at $3,619, $3,952 and $4,380 will try to block its path. Therefore, the buyers need to shatter these hurdles to reach the target of $4,816.
ETH/USD 1-day chart
Supporting the bullish outlook is IntoTheBlock’s Global In/Out of the Money (GIOM) model, which shows little-to-no resistance for ETH beyond $3,815.
Roughly 1.95 million addresses that purchased 3.17 million ETH at an average price of $3,815 are “Out of the Money.” Therefore, a decisive close above $3,815 will convert a majority of the holders to profitable and remove the unwanted selling pressure.
This development could trigger a massive bull run for ETH, pushing it past its all-time high at $4,380 and toward the intended target at $4,816.
ETH GIOM chart
On the other hand, the dominance of ETH is printing an ascending triangle. This metric is a measure of Ethereum’s market cap relative to the other altcoins.
Based on theoretical projects, this technical formation forecasts a 19% increase in ETH dominance, painting a bullish picture for its future and adding credence to the optimistic thesis detailed above.
ETH Dominance chart
While things are looking up for Ethereum price from a long-term perspective, the reduction in daily active addresses over the past month despite the increase in price shows that the market participants are still fearful.
As long as there is uncertainty among a large group of holds, there is a chance for a flash crash that pushes Ethereum price down to $3,200.
ETH DAA chart
The 365-day Market Value to Realized Value (MVRV) model supports the short-term flash crash thesis. This on-chain metric is used to determine the average profit or loss of investors who purchased ETH over the past year.
Currently, the 365-day MVRV is hovering at 50%, indicating that over half of the market participants that purchased ETH are profitable. Therefore, these investors could book profits, triggering a short-term downswing for Ethereum price.
ETH 365-day MVRV chart
The supply of ETH on exchanges has risen by 170,000 over the past week, indicating that investors might be rushing to centralized entities to book profit, further adding credence to the short-term bearish outlook.
ETH supply on exchanges
Referring to the Supply Shock on-chain metric, Willy Woo, a popular on-chain analyst, mentioned in his recent newsletter,
Ethereum’s fundamental demand and supply has not been climbing as much compared to Bitcoin.
He also adds that this is the region of historical strength, further indicating that the long-term outlook for both BTC and ETH remains bullish.
ETH, BTC supply shock chart
If Ethereum price drops below $2,765 and produces a decisive close below it, it would create a lower low, invalidating the bullish thesis. In this case, ETH might bounce off the demand zone, ranging from $2,442 to $2,605, and give the uptrend another shot.
Ethereum Rockets Higher – What’s Next?
September could be a nightmare for many crypto traders and investors as Ethereum dropped by 16%. According to the records, it is the second-largest level since June.
After the spectacular rally in cryptocurrency over the past 12 months, many expect that the market would experience a pullback.
However the possibility is low when it comes to linking short-term price changes to specific events – and the overall marketplace has been a mess.
Crypto Rally Hits Markets
In the last year, the value of Ethereum skyrocketed by approximately 830%, making it the second most valuable cryptocurrency in terms of market capitalization.
The cryptocurrency market has entered a tumultuous fourth quarter.
The Evergrande company crisis, as well as new rules aimed at restricting or abolishing the cryptocurrency business in several nations, caused cryptocurrency prices to fall.
Major currencies couldn’t run away from the fall, Bitcoin, Ethereum and others were incredibly affected.
It was a particularly difficult period for cryptocurrency. Increased transaction costs and sluggish network speeds continue to be a source of contention.
The flaws of Ethereum, on the other hand, bring advantage to alternative blockchains dubbed “ethereum killers”. Cardano or Solana gain more adoption as users choose to switch from Ethereum to these networks.
Cheap prices, faster transactions and usage make the alternatives unbeatable, especially in comparison with Ethereum price and speed, which has been well-known for being costly and limited.
Despite that, the current overarching platform is still Ethereum with a network spread from decentralized finance (DeFi), blockchain games to NFT.
The fact that Ethereum is moving very close to the old record value, shows that this second largest cryptocurrency will confront some significant obstacles in its attempt to stay ahead of the competition.
Ethereum Price to 100% Gains In Q4?
A market crash is the biggest fear at the moment, and it would cause investors to flee.
Bulls, consolidations, deviations are typical price movements on ETH’s chart since August. The price remained below $3,500 for six days in a row.
But breaking news shows that Ethereum broke through an overhead resistance level, now, many expect the price to hit the $3952 level and probably rally beyond $4000.
A convergence of positive technical and fundamental indications has the potential to more than quadruple the value of Ethereum’s native token, Ether (ETH), in the next months, according to the Ethereum Foundation.
On the first day of October, the price of ether jumped by more than 9%, exceeding $3,300 for the first time in 10 days.
A price bounce across all of the leading digital currencies, including Bitcoin (BTC), which climbed 9.5% to reach $48,000, the highest level in 10 days, was the primary catalyst for it to see gains.
Hard to Call
Despite its restrictions, Ethereum is hard to overlook. Because it’s currently an overcrowded network, it’s significantly more expensive than alternative networks. However, its most significant advantage was that it was one of the first platforms to provide services no other blockchain could.
October is predicted to be a month of significant triggers for the price of Ethereum.
First and foremost, the movement of the cryptocurrency will be determined by the performance of Bitcoin, the largest cryptocurrency in the world. There is a strong relationship between the two.
Second, the price will respond to the dangers that are present in the marketplace.
The US debt ceiling and the Evergrande issue are two of the most significant concerns that are projected. At the end of the month, the price of Ethereum will react to the mainnet upgrade, which will take place in the final week of the month.