Ethereum Fundamentals Signal $2,000 ETH Price Is Closer Than It Seems

Ethereum Fundamentals Signal $2,000 ETH Price Is Closer Than It Seems

In the early hours of Feb. 15, Ether (ETH) price plunged to $1,660, followed by a 9% recovery within 10 hours. The move triggered $280 million in futures contracts liquidations, indicating excessive leverage from longs.

Although the initial anxiety regarding CME’s ETH futures launch on Feb. 8 seems to have faded, sustained excessive transaction fees might have undermined investors’ confidence. Nevertheless, the fundamentals behind Ethereum remain solid, indicating ETH price should promptly recover from eventual dips.


Ethereum median transaction fee, USD. Source: BitInfoCharts

Even though the above metric might be interpreted positively, not every user can afford a $12 fee. A simple token swap on decentralized exchanges (DEX) can cost hundreds of dollars in gas fees, leaving small traders no choice but to abandon the network.

Multiple proponents are testing sharding and layer-two solutions to circumvent this issue, including Skale and Optimistic Network. Eth2 will use sharding to split the blockchain into several parts and increase the number of transactions the network can process at once.

The phenomenal growth of total value locked (TVL) in decentralized finance projects can’t be disregarded. The adjusted metric attempts to clean readings from ETH price increases, therefore providing more reliable data.


Adjusted total value locked, USD. Source: DappRadar

As depicted above, the 34% increase over the past 30 days falls in line with ETH’s 38% gain in February. Regardless of the transaction fees, there is still value created by automated market-making pools and staking mechanisms.

To better understand whether the recent crash reflects a potential local top and subsequent downtrend movement, one needs further data. Besides price action and technical analysis, investors should also gauge on-chain metrics such as network use. An excellent place to start is analyzing transactions and transfer value.


ETH/USD price (line) vs. transactions and transfers (area). Source: Coin Metrics

Coin Metrics data shows the 14-day average transactions and transfers rallying above $9 billion in daily transactions, a 32% increase from the previous month. This significant increase in transaction and transfer value signals strength and suggests that Ether’s price is sustainable at the current levels.

Although there is no consensus among analysts on the short-term price impact of exchange withdrawals, its effect is either neutral or bullish. The opposite movement, large continuous inflows, is the only bearish scenario, as it indicates holders’ willingness to sell.


ETH/USD price (black) vs. exchanges ETH reserve (red). Source: CryptoQuant

From Jan. 1 to Feb. 15, roughly 600,000 ETH was withdrawn from exchanges. Regardless of if whales are transferring to cold wallets or putting Ether into the DeFi ecosystem, those coins are less likely to be sold in the short term.

Considering this movement happened while Ethereum made a $1,870 all-time high, the indicator indicates holders’ confidence.

To conclude, based on both on-chain metrics and trading perspective, there are encouraging signals that $2,000 is within reach and that dips are being bought up aggressively.

author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.

Title: Ethereum fundamentals signal $2,000 ETH price is closer than it seems
Sourced From: cointelegraph.com/news/ethereum-fundamentals-signal-2-000-eth-price-is-closer-than-it-seems
Published Date: Mon, 15 Feb 2021 19:30:00 +0000

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Ethereum Price May Soon Hit $2,000 as Reflected by ETH Fundamentals – Crypto Top News

Ethereum Price May Soon Hit $2,000 as Reflected by ETH Fundamentals – Crypto Top News

The potentials in the price of Ethereum to soar to new levels is backed by the rise in the coin’s Total Value Locked (TVL) on DeFi platforms.

The price of Ethereum (ETH), the second-largest cryptocurrency by market capitalization, has been constantly touted to break past the $2,000 psychological level, and the latest key fundamentals in the crypto point towards this. There has been a mix of bullish and bearish runs in the crypto market space with Ethereum known to experience these upswings on a regular basis.

At the time of writing and according to CoinMarketCap, Ethereum is currently priced at $1,798.23 after seeing a 2.10% gain in the past 24 hours. From observations in recent times, there exists little correlation between Bitcoin (BTC) and Ethereum as a pump in the former hardly translates to a surge in the latter.

The need for scalability and measures to reduce the skyrocketing transaction fees associated with the network is becoming a major agenda for the Ethereum Foundation. Although data from BitInfoCharts revealed that the average transaction fees of the cryptocurrency have dropped in February, they are still relatively high when compared to other networks’ charges.

This makes the Ethereum network to be unattractive to traders and may account for the occasional drop in the price of the coin. However, other metrics are healthy and backs the digital asset’s strides to soar in the coming days.

The potentials in the price of Ethereum to soar to new levels is backed by the rise in the coin’s Total Value Locked (TVL) on decentralized finance (DeFi) platforms. According to data from DeFi Pulse, the total value locked on DeFi platforms is 7.735 million ETH, up from 6.625 million ETH recorded back on January 11, 2021.

The growth in the TVL corresponds with Ethereum’s price surge of over 45% this February. Another metric that points to the potentials of ETH to retest new highs is the number of coins held in exchanges. About 600,000 ETH have been withdrawn from trading platforms from January 1 to February 15th. These outflows suggest that Ethereum owners are transferring the coins to a cold wallet or for use in decentralized finance ecosystems.

The confidence is brewed with this aforementioned action as any opposite move, that is, inflows into exchanges may indicate a willingness to liquidate. These data show Ethereum price is sustainable at current levels, and any purchase action based on the prospects of the Ethereum 2.0 upgrade may help usher in a new bullish run to breach the long-awaited $2,000 price levels.

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Ethereum fundamentals signal $2,000 ETH price is closer than it seems

Ethereum fundamentals signal $2,000 ETH price is closer than it seems

In the early hours of Feb. 15, Ether (ETH) price plunged to $1,660, followed by a 9% recovery within 10 hours. The move triggered $280 million in futures contracts liquidations, indicating excessive leverage from longs.

Although the initial anxiety regarding CME’s ETH futures launch on Feb. 8 seems to have faded, sustained excessive transaction fees might have undermined investors’ confidence. Nevertheless, the fundamentals behind Ethereum remain solid, indicating ETH price should promptly recover from eventual dips.


Ethereum median transaction fee, USD. Source: BitInfoCharts

Even though the above metric might be interpreted positively, not every user can afford a $12 fee. A simple token swap on decentralized exchanges (DEX) can cost hundreds of dollars in gas fees, leaving small traders no choice but to abandon the network.

Multiple proponents are testing sharding and layer-two solutions to circumvent this issue, including Skale and Optimistic Network. Eth2 will use sharding to split the blockchain into several parts and increase the number of transactions the network can process at once.

What cryptocurrency will become the main one in a year?
BitcoinEthereum

The phenomenal growth of total value locked (TVL) in decentralized finance projects can’t be disregarded. The adjusted metric attempts to clean readings from ETH price increases, therefore providing more reliable data.


Adjusted total value locked, USD. Source: DappRadar

As depicted above, the 34% increase over the past 30 days falls in line with ETH’s 38% gain in February. Regardless of the transaction fees, there is still value created by automated market-making pools and staking mechanisms.

To better understand whether the recent crash reflects a potential local top and subsequent downtrend movement, one needs further data. Besides price action and technical analysis, investors should also gauge on-chain metrics such as network use. An excellent place to start is analyzing transactions and transfer value.


ETH/USD price (line) vs. transactions and transfers (area). Source: Coin Metrics

Coin Metrics data shows the 14-day average transactions and transfers rallying above $9 billion in daily transactions, a 32% increase from the previous month. This significant increase in transaction and transfer value signals strength and suggests that Ether’s price is sustainable at the current levels.

Although there is no consensus among analysts on the short-term price impact of exchange withdrawals, its effect is either neutral or bullish. The opposite movement, large continuous inflows, is the only bearish scenario, as it indicates holders’ willingness to sell.


ETH/USD price (black) vs. exchanges ETH reserve (red). Source: CryptoQuant

From Jan. 1 to Feb. 15, roughly 600,000 ETH was withdrawn from exchanges. Regardless of if whales are transferring to cold wallets or putting Ether into the DeFi ecosystem, those coins are less likely to be sold in the short term.

Considering this movement happened while Ethereum made a $1,870 all-time high, the indicator indicates holders’ confidence.

To conclude, based on both on-chain metrics and trading perspective, there are encouraging signals that $2,000 is within reach and that dips are being bought up aggressively.

author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.

Title: Ethereum fundamentals signal $2,000 ETH price is closer than it seems
Sourced From: cointelegraph.com/news/ethereum-fundamentals-signal-2-000-eth-price-is-closer-than-it-seems
Published Date: Mon, 15 Feb 2021 19:30:00 +0000

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Join Thousands of Early Adopters Just Like You Who Want to Grow Capital and Truly Understand Cryptocurrency Together

Source: newsgrowing.com

Author: Jeannine Cruz


Ethereum Fundamentals Signal $2,000 ETH Price Is Closer Than It Seems

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