Ethereum holders take “wait and see” approach to ETH 2.0's launch, while technicals turn bearish


  • Multiple on-chain metrics suggest that investors are taking a backseat as they gauge the launch of ETH 2.0.
  • Ethereum is likely to resume the uptrend towards $700 if buyers reclaimed the lost position above $600.

Ethereum's least resistance path is downwards even with phase 0 of the new Serenity protocol. Beacon Chain is the initial step to the process that is expected to take approximately two years.

The majority of investors prefer to watch from the sidelines instead of going all-in on the smart contract giant. It is worth noting that technicals are turning bearish fast; hence Ether could erase most accrued gains.

Ethereum 2.0 status quo

The launch of Ethereum 2.0 was expected to blast Ethereum towards $1,000 significantly. However, it seems that it will take longer for ETH to exchange hands at this level. The major takeaways of ETH 2.0 are the improvement of the protocol's scalability (to help bring down the too high transaction costs), efficiency, and speed.

According to blockchain experts, the above benefits are not to be expected immediately after launch. They might materialize with the launch of ETH 1.5, expected in nearly two years. In other words, almost all the processes will run on the original proof-of-work (PoW) consensus.

Ethereum holders stick to the sidelines

The smart contract token spiked by about 8% before the December 1 launch, hitting a new yearly high of $636. However, Ethereum has retreated under $600 while extending the losses toward the support at $560.

Santiment shows that social media mentions soared massively on Tuesday, hitting 982 on the day. A peak in social volume is rarely viewed as a bullish signal because it hints at an 'irrational' growth in confidence regarding the cryptocurrency's performance in the near future. Therefore, the high volume usually points towards a short term price correction.

Ethereum social volume chart

Ethereum social volume chart

Ethereum' daily active deposits', Santiment's on-chain metric that tracks the addresses sending funds to exchanges, slumped following the launch on December 1. Currently, active deposits hold roughly 8,300 ETH, representing an 80% drop from nearly 44,000 ETH. Hence, the selling pressure as Ether dives further below $600.

Ethereum active deposits chart

Ethereum active deposits chart

Consequently, on-chain data shows that the amount of Ethereum sent to exchanges shrunk massively following the launch. The exchange inflow indicator shows the number of tokens to exchanges has fallen from approximately 180,800 ETH on December 1 to roughly 32,200 on December 2, representing an 82% slide.

Ethereum exchange inflow chart

Ethereum exchange inflow chart

Santiment has established that the two metrics above tend to spike on weekends, hence the likelihood of Ethereum price reversing the trend upwards. Moreover, following the enormous spikes in age consumed towards the end of November, long-term holders of Ethereum still prefer to leave their coins unmoved.

Spikes in age consumed usually hint at high volatility and massive price actions. For now, Ethereum is likely to remain in a calm state as investors "wait and see."

Ethereum age consumed chart

Ethereum age consumed chart

A massive spike in the network realized profit (NPL) or loss after November 20 preceded the token's growth to last week's peak of $625. This metric tracks the number of addresses profitable on the network daily.

There is a tendency for prices to go down after the spike, as investors take profit, thus increasing the selling pressure. Over the last week, the NPL never recorded any significant movement suggesting that investors are not currently active.

Ethereum NPL chart

Ethereum NPL chart

From a technical perspective, Ethereum is likely to fall further, especially with the TD Sequential indicator having presented a sell signal on the weekly chart. The call to sell manifested in a green nine candlestick.

If it is validated, it could result in declines of between one to four daily candlesticks. Ethereum might extend the bearish leg further if supply increases significantly.

ETH/USD weekly chart

ETH/USD weekly chart

On the flip side, Ethereum will resume the uptrend if a reversal occurs above $600. Buyers are likely to rush back to the market if a breakout is confirmed towards the recent yearly high at $636. Moreover, investors will eventually leave the sidelines, and their activity could pave the way for Ethereum's ultimate liftoff to levels beyond $700.

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Cryptos feed

Latest Crypto News


Latest Crypto News & Analysis

Editors’ Picks

Top 3 Price Prediction Bitcoin, Ethereum, Ripple: XRP in a league of its own as BTC and ETH  pull back

Bitcoin price is currently showing signs of retracement after a second attempt to rally higher. Ethereum price tried following in BTC’s footsteps but lacked momentum. On the other hand, Ripple price is paving its way, but it might fall in line soon.

More Cryptocurrencies News

Shiba Inu exposes risk of 20% collapse

Shiba Inu price action has been uneventful despite the recent crypto market rally led by Bitcoin. SHIB continues to consolidate as it moves sideways, and an indecisive technical pattern has emerged.

More Shiba Inu News

Polygon looks to double in market value

MATIC price is hovering above a crucial support level at $0.996, expecting a break above. A 13% retracement to $0.855 seems likely if the selling pressure increases. A 100% upswing to $1.727 is on the cards for Polygon.

More Polygon News

Flippening becomes more likely as ETH trade volume growth exceeds BTC in first half of 2021

The growth in the trade volume of Ethereum exceeded that of Bitcoin so far in 2021, according to a report from Coinbase Global Inc. Increasing popularity of decentralized finance and the rise of scaling solutions are among key factors contributing to Ethereum's performance.

More Ethereum News

BEST CRYPTO BROKERS/EXCHANGES



Bitcoin Weekly Forecast: Markets revert to mean, but BTC price remains indecisive

Bitcoin price shows considerable strength after springing from the recent crashes. Still, it is uncertain whether the current bullish impulse will morph into a new uptrend or lead to a more profound decline.

Read the weekly forecast

BTC

ETH

XRP