FX.co ★ Ethereum consolidated above an important resistance level: should we expect further growth?

Ethereum continues to fluctuate within the narrow range of $1,150–$1,400 for exactly a month. The main altcoin made attempts to go beyond the range, but low trading volumes did not allow the asset to realize impulses. Despite this, the situation is changing for the better in the short term.

Ethereum managed to successfully gain a foothold above $1,300, which opens up the possibility of an upward movement to $1,500 and $1,600 for the altcoin. However, for the final resumption of growth, the asset needs to gain a foothold above $ 1,340.

After the formation of the second bullish candle in a row on the daily timeframe, the asset takes a pause. The RSI index and the stochastic oscillator remain in the bullish zone, but are turning sideways. The MACD is also moving flat, which indicates the absence of strong bullish momentum. Therefore, the current increase in ETH should be considered in the short term.

Ethereum on-chain activity

The main on-chain indicators of Ethereum are at below average levels. However, there is a tendency to increase trading volumes and the activity of unique addresses in parallel with the upward movement of the asset price. This is a positive signal indicating the probability of the continuation of the upward trend of the cryptocurrency.

Analysis of BTC, SPX, and DXY

A full-fledged upward movement of Ethereum is impossible without positive signals on BTC and S&P 500. On the daily chart, we see a similar upward movement of the stock index and Bitcoin. Thanks to this, the entire crypto market took a small step upward and the market capitalization grew by 1.5%.

At the same time, the US dollar index has moved to a phase of local decline, which gives the stock market and Bitcoin additional fuel for growth. Given this, high-risk assets will continue to grow as the DXY index corrects. However, the current state of the global economy and the Fed's policies lead to the conclusion that the current upward movement in assets is short-term.

Crypto Market and ETH News

After the Merge update, Ethereum lost about 20% of its market capitalization, which led to the leveling of some of the new features of the altcoin. For example, ETH stopped being deflationary after a massive drop in trading activity on the cryptocurrency network. Ethereum also has problems with censorship, as about 50% of validators can block transactions in accordance with US sanctions.

The volatility of the cryptocurrency market has fallen to a minimum, which indicates a significant decrease in investment interest. Meanwhile, Bitcoin is approaching the 2018 cycle low. The asset has been at the bottom of 886 since the halving. In 2018, the duration of being at the bottom was 891 days.

Given the propensity of bear markets to lengthen, we expect to be within the current ranges for at least a month. 98% of leaders of large companies expect a recession in the US economy in the next 12–18 months. It is these terms that should be used when analyzing the likelihood of a radical change in the situation in the crypto market and in the global economy.

Conclusions

Ethereum made a successful but insignificant maneuver in the overall price dynamics. Altcoin can reach the $1,500–$1,600 level if on-chain activity continues to grow with the price. However, this will not fundamentally change the situation on the market. This is a great opportunity for active traders, but the only thing left in the long-term strategy is to buy and accumulate.