Ethereum Fundamentals Bullish, But Does The Technical Analysis Rhyme?

ETH price will go up or down?

Since the yearly lows of $106 on 13 March, as with most of the crypto asset class ETH recovered recovered rapidly since the crash, but since the start of June the ETH price has been at a crossroads.

Much of the recovery has been driven by institutional investment as we have seen an unprecedented amount invested in Grayscale’s Ethereum Trust.

But will the recovery continue or has it reached exhaustion point? Let’s take a look at some ETH USD analysis to see which way we’re likely headed.

Ethereum Fundamental Analysis

With Phase 0 of Ethereum 2.0 set for an imminent launch, the fundamentals of Ethereum have never looked stronger. And with institutional investors also on the search for somewhere to park their money, Ethereum is high on the list.

This sentiment was further cemented in Deloitte’s 2020 blockchain research report, which claims Ethereum represents blockchain’s best opportunity for enterprise uptake.

The report, which looked into Ethereum’s scalability and security, returned a bullish forecast for Ethereum adoption.

This is reflected in the amount of institutional interest in Ethereum through asset management firm Grayscale’s Ethereum Trust.

The trust (ETHE) has $364.2m AUM, which is up from $11.7m in little over a year, and most of it has been amassed this year alone.

And it’s highly likely that Grayscale’s systematic purchase of Ethereum has created a demand flow that has driven Ethereum prices from the yearly lows to current levels.

This is reflected throughout the institutional space as we see plenty of investment going into the DeFi space, and as ETH 2.0 takes off, I would expect to see much more interest in Ethereum.

Ethereum Technical Analysis

Starting with the weekly chart, we can see on the chart below the descending channel is the most obvious pattern and it has dominated the price action since May 2019.

ETH 1W chart
Charts from Seeking Alpha

Recent price action tested resistance of this channel, but is yet to break out. We can see the ascending channel that’s formed since April 2020, but as we see with last week’s rejection, it could likely a cause further drawback.

Looking at the daily chart, the price picture becomes clearer. Since the lows in March we can see a sharp rise, which has formed a nice ascending channel, with a few corrective bounces on the way up.

With an ascending triangle forming in May, we can then see once that was broken from early June 2020, the price action was to the upside, even testing the descending upper ceiling, albeit unsuccessfully.

ETH 1D

After trying to break through the ceiling and the $250 mark, the bulls took the rejection after a second attempt and we saw a drop to support at $233.

This pullback should give the bulls time to build up more steam, especially if it holds with the support, and we could see another attempt at breaking the descending channel resistance.

If the bulls are able to break of the $250, then we can expect further gains until at least the main resistance, $256.22. If we can break this we can potentially see much higher short term gains, potentially around the $280 mark.

If price can’t breach the ceiling, however, we could see further drawbacks. Another rejection in this ascending channel would likely see the bulls weaken further, and a likely fall through support and a test of the $214.94 support.

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Conclusion

Technical Analysis is never straight forward, but with ETH seemingly at a crossroads in the short term, the price really could go either way.

The bears seem to be gaining momentum after a positive first half to Q2 for ETH bulls, but with all the macro fundamentals gaining traction, it’s hard to summon ETH to a major crash.

We could see a pull back to the low $200s, but if this happens, I would be snapping ETH up as much as possible.

Author: Pablo Clarke

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When I came up with Ethereum, my first first thought was, 'Okay, this thing is too good to be true.' As it turned out, the core Ethereum idea was good - fundamentally, completely sound