Ethereum price failed to breakout despite strong fundamentals
Ethereum price increased by less than 5% in 2019, marking a worse performance than Bitcoin. Meanwhile, BTC still maintained an incredible 95% annual increase despite the previous sell-off.
In the context of Ethereum successfully implementing its latest Istanbul network upgrades and the growing popularity of decentralized finance (DeFi), what is the strategy for ETH to catch up with No.1?
Current Ethereum price
Despite a massive ETH rally in late 2017 to early 2018, the price is still significantly lower than BTC this year.
Ethereum performance compared to Bitcoin YTD | Source: Trading View
ETH has recently dipped below a significant support area and confirmed it is a resistance level. Currently, the price is descending towards the support line of the descending channel. Inside this channel, the Ethereum price has dropped by 40%. However, it has begun to show some signs of a reversal.
Trader “Cactus” has outlined the current trading model for Ethereum, and the price is likely to test the lower support zone of $ 137.
$ETH another test of channel support but this time we have failed to reclaim this longterm support level of $153.
Even though we may see some support at this channel low its likely now that confirming previous support is new resistance we could see PA test lower support at $137. pic.twitter.com/M8pfYlJMnO
— Cactus (@TheCryptoCactus) December 12, 2019
If ETH’s growth rate is higher than that of BTC, it is possible that the ETH / BTC pair may rise higher.
Trader Crypto Michaël thinks the current ETH / BTC movement is very similar to 2016 ahead of the 2017 bullish move.
Still looks the same to me. pic.twitter.com/4GwOKA01hz
— Crypto Michaël (@CryptoMichNL) December 12, 2019
The resistance lines are very similar. The 100-day moving average (MA) shows some similarities since the price moved above it in 2016 compared to the present.
However, the RSI is in a very different position, and the price movement is below resistance, and the percentage/downtime is very different.
Therefore, while there are similarities, we do not believe that they are sufficient to conclude that the current movement repeats the previous change.
The fundamentals remain strong
Ethereum has seen an increase in user activity throughout 2019. Backed by DeFi’s steady growth, the ecosystem is expected to expand rapidly by 2020.
Joseph Lubin of ConsenSys insists that the fundamentals of Ethereum are strengthening. According to him, since 2019, more than 20 million Ethereum accounts have been created, $ 650 million has been locked into DeFi, and 4.5 million ETH have been issued from block rewards.
DeFi’s growth has directly affected the increase in Ethereum users’ activity in recent months. The efforts to expand the Ethereum network will further promote the practicality of DeFi-related services in the medium and long term.
The number of unique Ethereum addresses continues to increase | Source: Etherscan.io
According to TokenAnalyst, there is an interesting correlation between the new ETH addresses and the price of Ethereum.
We were playing around with our API and plotted new ETH addresses by day (incl. smart contracts) vs price.
— TokenAnalyst (@thetokenanalyst) December 10, 2019
As the ETH price significantly increased, so did the number of new addresses. Other cryptocurrencies like Bitcoin seem to share the same pattern.
Both the ecosystem and the platform around Ethereum are trying to position the network to scale in the coming months to create an active ecosystem for developers.
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