Although the price of Ethereum (ETH) since hitting an all-time high (ATH) of around $ 4,867 on the 10th, macro and on-chain indicators suggest.
One of these indicators predicts that ETH price will hit $ 5,000 in the first quarter of 2022 while the other is ready to support the uptrend.
The ETH Prize draws a falling wedge pattern
Ethereum’s recent price correction paints a potential classic bullish reversal pattern known as the “bearish wedge”.
In particular, a falling wedge is a pattern that expands upwards but contracts when price moves downwards. As a result, price action forms a bearish cone when resistance and support lines intersect at one point. Traders see an uptrend after the price breaks significantly above the resistance level of the wedge.
So there is still a high expectation that Ethereum price will break the descending resistance line in the coming sessions. The price then rises by the maximum distance between the upper and lower trend lines of the wedge, measured from the breakout point.
– Kong Trading (@KongBTC) January 4, 2022
This sets a price target for ETH at around 5,000 US dollars.
Ethereum deposits on exchanges are falling
Traders often move their tokens on exchanges when they intend to sell / exchange them for fiat, stablecoins or other cryptocurrencies.
In general, the higher number of trades on the exchanges reflects the high sales sentiment in the market. On the contrary, a decrease in the number of transactions indicates a strong stance on the part of the market.
Data collected by the blockchain analytics service Glassnode shows that the number of Ether deposits on exchanges fell to a 23-month low on January 3rd.
ETH deposits on the stock exchange | Source: Glassnode
Additionally, another Glassnode metric shows that the number of addresses sending Ethereum to exchanges has gone down along with price over the past 30 days, down almost 11%.
Number of Ethereum addresses that ETH send to exchanges | Source: Glassnode
Meanwhile, total ETH balances on all exchanges have been on a downward trend since August 2020, suggesting investors will hold up as long as the token price went from nearly $ 400 to over 3,800 small US dollars over the same period. Dollar rises.
ETH balance on exchanges | Source: Glassnode
Cheap money here to survive?
The decline in ETH of over US $ 1,000 from November 2021 is mainly due to the restrictive (in favor of a tight monetary policy) policy of the US Federal Reserve (Fed).
The US Federal Reserve decided to accelerate its $ 120 billion monthly asset-purchase program, followed by three rate hikes from near zero by 2022 to contain inflation. Its loose monetary policy was one of the main catalysts behind the rallies in Ethereum, Bitcoin and other crypto markets.
ETH / USD vs. BTC / USD Weekly Frame Price Chart | Source: TradingView
But the Fed’s efforts to contain inflation from its current 6.8% with three rate hikes may not have an impact on Bitcoin and Ethereum prices in the long run. Antoni Trenchev, managing partner of crypto lending company Nexo, believes cheap money is available.
“The No. 1 influencing factor for Bitcoin and crypto in 2022 is central bank policy. There is cheap money, which means a lot for cryptocurrencies. The Fed has neither the courage nor the strength to withstand a 10-20% crash in the stock market combined with a negative reaction in the bond market. “
Hungarian billionaire Thomas Peterffy also said that investors should allocate at least 2% to 3% of their net portfolio to cryptocurrencies like BTC and ETH in case the fiat prison “goes down” like Bitcoin magazine reported.
Additionally, Ray Dalio, founder of Bridgewater Associates, announced that he is holding BTC and ETH in his portfolio to hedge against the risk of cash devaluation due to high inflation.
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