What Is Ethereum And How Does It Work?

What Is Ethereum And How Does It Work?

The Ethereum network can also be used to store data and run decentralized applications. Rather than hosting software on a server owned and operated by Google or Amazon, where the one company controls the data, people can host applications on the Ethereum blockchain. This gives users control over their data and they have open use of the app as there’s no central authority managing everything.

Perhaps one of the most intriguing use cases involving Ether and Ethereum are self-executing contracts, or so-called smart contracts. Like any other contract, two parties make an agreement about the delivery of goods or services in the future. Unlike conventional contracts, lawyers aren’t necessary: The parties code the contract on the Ethereum blockchain, and once the conditions of the contract are met, it self-executes and delivers Ether to the appropriate party.

Ethereum vs Bitcoin

Bitcoin’s primary use is as a virtual currency and store of value. Ether also works as a virtual currency and store of value, but the decentralized Ethereum network makes it possible to create and run applications, smart contracts and other transactions on the network. Bitcoin doesn’t offer these functions. It’s only used as a currency and store of value.

Ethereum Price Prediction: ETH struggles to establish clear trend

Ethereum price is nearing the lower trend line of a massive ascending parallel channel.

Although a bounce seems likely and logical, ETH might not witness this move due to stacked resistance barriers ahead.

A breakdown of the support level at $1,513 will indicate the start of a downtrend.

Ethereum price is treading dangerously close to the lower boundary of a technical formation. A breakout from this level could spell disaster for ETH.

Ethereum price at make-or-break point

Ethereum price has traded within the confines of an ascending parallel channel for over two months. Within this period, ETH created two higher highs and four higher lows.

Although a breakout from the lower trend line of the setup is bearish, ETH bulls seem to have defended the latest retest. Now, a bounce seems likely for the smart contracts platform token.

If the bull rally continues, Ethereum price could see a 55% upswing toward the 127.2% Fibonacci extension level at $2,500. However, this upswing will be anything but manageable due to the multitude of supply barriers present between the current price and the target.

To confirm a solid bullish momentum, a decisive close above $1,744 coinciding with the 78.6% Fibonacci retracement level and the Momentum Reversal Indicator’s State Trend Resistance at $1,818 is necessary.

A successful and sustained climb above these levels suggests that Ethereum price is ready for the next leg up.

ETH/USD 12-hour chart

Adding credibility to this upswing is the stark decrease in the number of daily active deposits. A 21% decrease in this metric suggests that investors are done booking profits, at least for now. Hence, this a bullish development for Ethereum price.

Meanwhile, the number of daily active addresses has not seen a massive change. Despite the recent 20% crash, the number of users interacting with the ETH blockchain remains the same, which can be viewed as a bullish sign.

Ethereum Daily Active Addresses and Daily Active Deposit chart

Regardless of the bullish outlook, IntoTheBlock’s In/Out of the Money Around Price (IOMAP) model paints a rather bearish picture for Ethereum price.

The resistance levels are stacked on top of each other, from $1,640 to $1,784. In fact, 1.2 million addresses that previously purchased $13.25 million ETH are “Out of the Money.” Therefore, ETH price needs to break past the initial set of resistance zones and then face a cluster of underwater investors to have any chances of surging higher.

Failing to do so will add to the already grim scenario and kickstart a descent.

Ethereum IOMAP chart

To conclude, the Ethereum price seems to be facing Insurmountable odds and could slide 10% lower to $1,360 if the crucial support level at $1,510 is breached.

Venture-Backed Ethereum Project Optimism Delays Launch

Bloomberg

(Bloomberg) – The Cboe Volatility Index may have just wiped out the pandemic-induced doom and gloom, but Munich money managers Daniel Danon and Tobias Knecht are fretting over the warning signs still flashing across the stock market’s underbelly.The recent decline in the Wall Street fear gauge to pre-virus levels belies the “tension beneath the calm” within the volatility landscape, according to the traders at Assenagon GmbH with 27 billion euros ($32 billion) under management.“The price for protection against sharp downside moves, sharp correlated moves or for just outright volatility exposure is high,” Danon and Knecht, who specialize in such derivatives strategies, wrote in an email.The extreme demand for portfolio hedges suggests that all is not well for the U.S. stock bull run, which is already on shaky ground between rising Treasury yields and extended lockdowns. It shows how volatility markets are still on edge one year after the S&P 500 hit rock bottom, according to speculators who bet on price swings.“It does not feel that the volatility risk premium vanished so quickly,” the Assenagon investors said.For nearly a year after the pandemic crash, the VIX – which measures implied volatility in S&P 500 options – remained historically elevated even as stocks boomed to fresh records.But despite the gauge finally closing under the psychological 20 level over the past week, a deluge of technical indicators show investors are still bidding up downside protection.Take the skew, which measures how much traders are willing to pay for hedging against steep market drops. The cost for one-year protection on the main U.S. stock benchmark “is at extreme levels over a rather long history,” according to Danon and Knecht.Ditto two other Wall Street measures of fear: the implied correlation on both the S&P 500 and Nasdaq 100. That’s a sign traders overall reckon individual stocks will move together – something that tends to happen during selloffs.The VIX was trading at 21 at 10:10 a.m. in New York, as the S&P 500 Index dropped 0.1%.With demand for hedges still high relative to how much stock prices have actually swung around this year, Pierre de Saab is seeing plenty of nerves out there.“VIX could come down to 15-18 and still remain expensive versus realized volatility,” said the Geneva-based volatility manager at Dominice & Co.Between lingering pandemic fears, a lack of short-sellers and rising Treasury yields the VIX term structure also remains unusually steep – showing traders are anticipating more volatility in the future.Both the three- and six-month futures contracts cost around 20% more than their historical average, according to Susquehanna International Group LLP.That’s not to say the VIX itself can’t fall further, especially given the strength of technical forces. Funds that adjust their strategies according to a one-year historical window will start to unwind hedges as last March’s mayhem fades from view.Another source of upward pressure on implied gauges – fervent call-buying among retail investors – looks like it is fading.“I think it’s a matter of time without a true fear- and flows-inducing event that low vol will be back in place – even if not as stable,” said Colton Loder, managing principal of Cohalo Advisory LLC, an alternative investment firm in Washington.Yet for all that, the angst flashing in the derivatives landscape right now is historically unusual relative to current VIX levels.“Although near term volatility has decreased, the scars from Covid likely leave investors hesitant to bring down medium and longer term volatility,” Susquehanna’s Chris Murphy wrote in a note.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.