After months of wallowing in the doldrums of bearishness, cryptocurrencies turned things around in the past week with a sudden rise in prices. Bitcoin, Ethereum, and several other cryptocurrencies experienced a significant surge in their prices, much to the delight of investors.
After the euphoria of the price rally, Ethereum seems to have entered a consolidation phase, sparking worry among some investors. However, a cursory look at some key metrics indicates imminent bullishness for the second-largest cryptocurrency in the world.
Ethereum and the Market Rally
The market had been suffering from a general downtrend for over a month, characterized by falling prices and transaction volumes. However, things quickly changed in this past week, as Bitcoin soared by over 30% to reach $40K for the first time since June.
Other alts joined Bitcoin in the rally and notched equally impressive highs, including Ethereum. Ethereum achieved a high of 28.8% over the past week, including a 7 day high of $2,428. During the period in review, daily transaction volumes spiked as it tried to close the distance with Bitcoin.
The general uptrend in the cryptocurrency market saw its global market capitalization surpass $1.55 trillion, bringing it one step closer to the levels seen in April and May,
Consolidation
Nothing lasts forever, and what goes up must come down. This saying is particularly true for Ethereum whose momentum from the previous week has slowly waned as the asset consolidates.
The derivatives market was one to feel the impact of the consolidation as the volume of futures plummeted steeply, from highs of $43 billion, down to $28 billion in around 48 hours. Futures’ short liquidations also fell in the wake of Ethereum’s consolidation.
Ethereum has only managed a gain of 0.87% in the last 24 hours as it finds itself in a precarious position, with trading volumes over the last day reflecting a 24.05% decline.
On The Flipside
Light at the End of the Tunnel
Although Ethereum may be in the throes of consolidation, there are a number of key metrics that suggest that bullishness may be on the horizon. Firstly, examining profit and loss indicators shows that losses are rapidly diminishing, which is often a positive sign for investors.
Secondly, although market value to realized value (MVRV) is on a downward trend, supply in profit is currently higher than supply in losses, and that may serve as the incentive for investors to back Ethereum.
All hope is not lost for Ethereum, and there seems to be light at the end of the tunnel. At the time of writing, Ethereum is trading at $2,311 and could potentially rise in value in the near future.
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Source: Cryptocurrency - investing.com
