Ethereum, Litecoin, and Ripple’s XRP – Daily Tech Analysis – January 29th, 2021
Ethereum
Ethereum rallied by 7.46% on Thursday. Partially reversing a 9.28% slide from Wednesday, Ethereum ended the day at $1,333.61.
A mixed start to the day saw Ethereum fall to an early morning intraday low $1,220.08 before making a move.
Steering clear of the first major support level at $1,173, Ethereum rallied to a late intraday high $1,363.27.
Ethereum broke through the first major resistance level at $1,343, before easing back to end the day at sub-$1,340 levels.
At the time of writing, Ethereum was up by 0.81% to $1,344.00. A mixed start to the day saw Ethereum slip to an early morning low $1,331.35 before rising to a high $1,345.29.
Ethereum left the major support and resistance levels untested early on.
For the day ahead
Ethereum would need to avoid a fall through the pivot level at $1,306 to support a run at the first major resistance level at $1,391.
Support from the broader market would be needed, however, for Ethereum to break out from Thursday’s high $1,363.27.
Barring an extended crypto rally, the first major resistance level and resistance at $1,400 would likely cap any upside.
In the event of another extended crypto rally, Ethereum could test the second major resistance level at $1,449 and resistance at $1,500.
Failure to avoid a fall through the $1,306 pivot would bring the first major support level at $1,248 into play.
Barring an extended sell-off, however, Ethereum should steer clear of the 23.6% FIB of $1,148. The second major support level at $1,162 should limit the downside.
Looking at the Technical Indicators
First Major Support Level: $1,248
Pivot Level: $1,306
First Major Resistance Level: $1,391
23.6% FIB Retracement Level: $1,148
38.2% FIB Retracement Level: $944
62% FIB Retracement Level: $614
Litecoin
Litecoin rallied by 8.89% on Thursday. Partially reversing a 9.08% slide from Wednesday, Litecoin ended the day at $133.61.
A mixed start to the day saw Litecoin fall to an early morning intraday low $120.91 before making a move.
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Steering clear of the first major support level at $115.38, Litecoin rallied to a late intraday high $136.29.
Litecoin broke through the 38.2% FIB of $125 and the first major resistance level at $132.51.
In spite of a late pullback to end the day at $133 levels, Litecoin avoided a fall back through the first major resistance level.
At the time of writing, Litecoin was up by 1.55% to $135.68. A bullish start to the day saw Litecoin rise from an early morning low $133.58 to a high $136.06.
Litecoin left the major support and resistance levels untested early on.
For the day ahead
Litecoin would need to avoid a fall through the $130.27 pivot level to support a run at the first major resistance level at $139.63.
Support from the broader market would be needed, however, for Litecoin to break out from Thursday’s high $136.29.
Barring an extended crypto rally, the first major resistance level and resistance at $140 would likely cap any upside.
In the event of an extended breakout, Litecoin could test resistance at $150 before any pullback. The second major resistance level sits at $145.65.
Failure to avoid a fall through the $130.27 pivot level would bring the 38.2% FIB of $125 and the first major support level at $124.25 into play.
Barring another extended sell-off, Litecoin should steer clear of the second major support level at $114.89.
Looking at the Technical Indicators
First Major Support Level: $124.25
Pivot Level: $130.27
First Major Resistance Level: $139.63
23.6% FIB Retracement Level: $148
38.2% FIB Retracement Level: $125
62% FIB Retracement Level: $87
Ripple’s XRP
Ripple’s XRP rose by 5.63% on Thursday. Partially reversing a 6.51% decline from Wednesday, Ripple’s XRP ended the day at $0.26476.
A mixed start to the day saw Ripple’s XRP fall to an early morning intraday low $0.24749 before making a move.
Steering clear of the first major support level at $0.2402, Ripple’s XRP jumped to a late intraday high $0.27076.
Ripple’s XRP broke through the first major resistance level at $0.2653 before pullback back to end the day at sub-$0.2650 levels.
At the time of writing, Ripple’s XRP was up by 1.39% to $0.26844. A bullish start to the day saw Ripple’s XRP rise from an early morning low $0.26487 to a high $0.27000.
Ripple’s XRP left the major support and resistance levels untested early on.
For the day ahead
Ripple’s XRP will need to avoid a fall through the $0.2610 pivot level to bring the first major resistance level at $0.2745 into play.
Support from the broader market would be needed, however, for Ripple’s XRP to break out from this morning’s high $0.2700.
Barring an extended crypto rally, the first major resistance and resistance at $0.2750 would likely cap any upside.
In the event of an extended rally, Ripple’s XRP could test resistance at $0.2850 before any pullback. The second major resistance sits at $0.2843.
Failure to avoid a fall through the $0.2610 pivot would bring the first major support level at $0.2512 into play.
Barring another extended crypto sell-off, Ripple’s XRP should steer clear of sub-$0.25 levels. The second major support level sits at $0.2377.
Looking at the Technical Indicators
First Major Support Level: $0.2512
Pivot Level: $0.2610
First Major Resistance Level: $0.2745
23.6% FIB Retracement Level: $0.6274
38.2% FIB Retracement Level: $0.5285
62% FIB Retracement Level: $0.3687
Please let us know what you think in the comments below.
Thanks, Bob
This article was originally posted on FX Empire
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Reddit Joins With Ethereum Foundation to Build Scaling Tools
Reddit is growing its role in the Ethereum ecosystem, with the goal of building out scaling tools for the blockchain network.
The social media platform announced Wednesday it was expanding its work with the Ethereum Foundation to provide development resources to scaling tools. In the announcement, posted to the Ethereum subreddit, Reddit employee u/jarins said the move increases its commitment to the technology, and echoes its long-held “decentralized ethos.”
“In this new stage of our partnership, immediate efforts will be focused on bringing Ethereum to Reddit-scale production,” the announcement said. “Our intention is to help accelerate the progress being made on scaling and develop the technology needed to launch large-scale applications like Community Points on Ethereum.”
Related: ‘The Squeezening’: How the Gamestop Backlash will Curtail Freedom
This partnership could result in Reddit working on layer 2 scaling tools or pushing projects from a prototype stage to production.
Reddit development resources, including a developer team, would be involved in this work. Ultimately, the idea is a project like Reddit’s Community Points feature could be capable of supporting the site’s millions of users (Reddit has over 50 million daily users as of press time, according to Wednesday’s announcement).
“Our blockchain efforts will be led by Reddit’s Crypto team,” the announcement said, adding the company currently has job openings for backend engineers.
Community points
Reddit introduced Community Points last year, rolling them out to the CryptoCurrency and FortNiteBR subreddits (communities built around cryptocurrency discussion and the FortNite game).
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In short, the idea is users can reward each other points for making “quality posts,” with these points being redeemable for badges or other custom features. These points are stored on Ethereum’s Rinkeby testnet as ERC-20 tokens, meaning that unlike Reddit’s in-house karma system, the company cannot control these points.
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The company had been experimenting with the idea for at least a month prior to rolling it out to the website. In June, it asked for the community to assist with scaling the project.
The company did not provide volume figures for how many points have been rewarded or redeemed to date, but the CryptoCurrency and FortNiteBR subreddits each had over 1 million users as of press time.
It does not appear that Reddit plans to expand the system to additional communities, or move from Rinkeby to the Ethereum mainnet.
“The scaling technology developed through this partnership will be open-sourced and publicly available for anyone to use,” the announcement said.
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Valid Points: What to Expect When Ethereum 2.0 Undergoes Its First ‘Hard Fork’
Eth 2.0 is looking at its first hard fork this year.
The Ethereum Foundation-backed research team is currently organizing schematics for a mid-2021 backward-incompatible change to the Beacon Chain, according to a Jan. 14 developer’s call.
This hard fork is really not a hard fork in the traditional sense, Teku client project manager Ben Edgington pointed out. Rather, it’s a warmup before sharding and a merge of the Eth 1.x and Beacon Chain.
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“The word ‘fork’ is heavily overloaded in blockchain usage. In fact, there shouldn’t even be a fork when this upgrade is done, in the sense of the network ending up with multiple competing chains,” he wrote in his Eth 2.0 blog post on Jan. 15.
The upgrade is likely to include the following code changes, although these changes have yet to be fully agreed upon:
Infrastructure for light client support through sync committees. Light clients enable verification of the chain without needing as much overhead as a typical validator rig.
A new function, called balance_denominator, changing in-activity penalties against non-participating validators. The current penalty method is a denial-of-service (DOS) vector while the new function increases the chain’s efficiency, Eth 2.0 researcher Danny Ryan wrote on GitHub.
Rewards will be calculated over an epoch (similar to a block) instead of after the epoch closes as is currently done. Egington notes the change should help limit the number of incorrect attestations.
Ice Age on Eth 2.0?
One additional feature that is being considered is the inclusion of the difficulty bomb, also known as the “Ice Age.” The difficulty bomb – which kicks into gear at pre-set block heights – is a mining adjustment mechanism originally added to the Eth 1.x blockchain in 2015. It makes mining incrementally more difficult over time in an effort to keep developers motivated to build Eth 2.0.
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To date, the Ice Age has been postponed three times on the proof-of-work (PoW) Ethereum blockchain in the Byzantium (2017), Constantinople (2019) and Muir Glacier (2020) hard forks.
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The difficulty bomb is a staple of Ethereum as it pushes economic incentives on developers to keep innovating on the baselayer. Yet, it’s unlikely to be included in Eth 2.0 as there’s already an economic force pushing Beacon Chain development, Ryan told CoinDesk in a yet-to-be-released Mapping Out Eth 2.0 podcast.
“There is no Ice Age on the Beacon Chain, but it essentially has a forcing function because right now there is 2.5 million ETH locked into the system,” Ryan said. “There’s no way developers in the community at that order of magnitude would allow it to live in parallel and not have it do anything more.”
The decision to include or not include a difficulty adjustment feature like the Ice Age into Eth 2.0 itself comes down to how you see the Ethereum blockchain progressing after Eth 2.0 is complete, he said. Some want further innovation while some think ossification similar to Bitcoin’s blockchain is the way to go.
“Some want to continue to upgrade and iterate and bring in the latest cryptography into Layer 1. I’m sure the debate whether an Ice Age should exist in Ethereum 2.0 will center around some of those ideas of ossification versus continual upgrades,” Ryan said.
Eth 2.0 reaches all-time high for network participation
The Ethereum 2.0 network continues to grow at a steady pace and at near-perfect user participation levels. On Saturday, Jan. 23, Eth 2.0 reached its highest daily average network participation rate at 99.46%. This indicates that, despite a growing number of participants, validators on Eth 2.0 are largely engaged in securing the network and earning rewards.
As background, the economics of Ethereum 2.0 operates on a sliding scale of rewards that adjusts dynamically based on the total number of active validators. The larger the number of validators staked on Eth 2.0, the lower the total amount of rewards issued on the network. (Read more about Eth 2.0’s monetary policy here.)
The daily average of rewards earned per validator dipped to a seven-week low on Thursday, Jan. 21, at 0.007235 ETH. However, due to the bullish price activity of ether in the crypto markets, the value of rewards earned on the network has increased 81.47% over the same time period. In other words, because the ETH price has risen, validators are earning more on average per day in U.S. dollar (USD) terms.
Breakdown of Eth 2.0 user deposits
One other useful metric for evaluating ongoing network health and decentralization is the breakdown of user deposits on Eth 2.0. According to a tool still in beta testing by blockchain explorer Etherscan, roughly 50% of all ETH deposits are made by cryptocurrency exchanges and staking pools.
This suggests an equal balance between individuals choosing to stake using their own hardware and software and those who choose to rely on a service provider to do it for them. Shifts in this distribution over time will indicate growing advantages as well as disadvantages, swaying users towards one method of staking on Eth 2.0 versus another.
For now, the even distribution of Eth 2.0 depositors is a strong indicator that running hardware independently versus relying on a provider to do it for you are both equally attractive options for users.
Validated takes: Further reading from the past week
The bull case for cryptography by Justin Drake (Podcast, Bankless)
Big investors stacked up ether as price rose to record high (Article, CoinDesk)
Ethereum-based ConsenSys Quorum partners with China’s BSN blockchain (Article, CoinDesk)
Minority mining pools threaten to collude against contentious Ethereum upgrade (Article, CoinDesk)
More institutional investors are buying ether and seeing it as a store of value (Article, CoinDesk)
Ethereum NFTs are getting merged with augmented reality (Article, Decrypt)
Smart contract platforms and DeFi are outperforming in 2021 (Blog post, Into The Block)
Ethereum 2.0 client team Prysmatic Labs’ summary of 2020 (Blog post, Prysmatic Labs)
Factoid of the week
We’ll soon be incorporating data directly from CoinDesk’s own Eth 2.0 validator node in our weekly analysis. All profits made from this staking venture will be donated to a charity of our choosing once transfers are enabled on the network. For a full overview of the project, check out our announcement post.
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