Ethereum’s on-chain data suggests the worst is to come after 10% correction 🚨 This article is 4 years old...
Ethereum’s on-chain data suggests the worst is to come after 10% correction
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Updated: Aug. 26, 2020 at 8:06 am UTC
Photo by McCall Alexander on Unsplash
Even counting the recent bounce, Ethereum hasn’t performed well over the past week. After peaking at $440 last week, the price of the leading cryptocurrency has slipped around 10 percent lower.
At the worst of the rally, the cryptocurrency tapped $380, but Ethereum now trades above $404 as buyers have stepped in across the crypto and legacy markets.
Despite the ongoing reclamation of the pivotal $400 technical level, there are on-chain and exchange indicators suggesting a bigger correction is imminent.
ETH could suffer bigger correction as on-chain and exchange signals are bearish
Blockchain analytics firm IntoTheBlock reports that as of the morning of Aug. 24, four of seven of Ethereum’s core metrics are currently printing “bearish” readings. Two of the other readings are “neutral” and the last one is “bullish.”
The four “bearish” metrics are as follows:
- In the money: a metric that tracks the momentum of the profitability of Ethereum holders.
- Large transactions: the number of transactions worth over $100,000 for a cryptocurrency over a 24-hour time span
- Bid-ask volume imbalance: the difference between the orders on the buy side of a market compared to the sell side.
- Futures market momentum: the momentum of a cryptocurrency’s futures markets as determined by other metrics like open interest and trading volume.
IntoTheBlock’s observations come shortly after another blockchain data firm, Santiment, reported that the number of daily active Ethereum addresses has been on the decline as of late despite increased transaction counts.
This lends to the theory that smaller ETH and altcoin holders are getting priced out of using Ethereum due to high transaction fees.
Fundamentals of Ethereum remain bullish
Despite this bearish outlook in the near term, analysts are certain that the longer-term fundamentals of the network remain decisively bullish.
Chris Burniske, a partner at Placeholder Capital, said earlier this year that he thinks ETH’s on-chain economies (referencing DeFi) and its position in the eyes of the public will allow it to approach a $1 trillion network valuation:
“Meanwhile, to the mainstream $ETH will be the new kid on the block — expect a frenzy to go with that realization. Given $ETH’s outperformance of $BTC over its lifetime (chart below again), not to mention smaller network value and strong on-chain economies, I see every reason for $ETHBTC to surpass ATHs.”
This has been echoed by Real Vision CEO Raoul Pal, who has commented that DeFi is likely to propel ETH higher.
In terms of tangible trends that indicate Ethereum is on the right track, more than 0.2 percent of all BTC is now represented on Ethereum, while Tether is migrating some of its service to the OMG Network, based on Ethereum.
Ethereum Market Data
At the time of press 8:06 am UTC on Aug. 26, 2020, Ethereum is ranked #2 by market cap and the price is down 4.02% over the past 24 hours. Ethereum has a market capitalization of $42.89 billion with a 24-hour trading volume of $12.77 billion. Learn more about Ethereum ›
Crypto Market Summary
At the time of press 8:06 am UTC on Aug. 26, 2020, the total crypto market is valued at at $354.43 billion with a 24-hour volume of $111.13 billion. Bitcoin dominance is currently at 59.17%. Learn more about the crypto market ›
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In this article
Ethereum is a decentralized, open-source blockchain platform that enables the creation of smart contracts and decentralized applications (DApps).
Tether
$1.00118
Launched in 2014, Tether is a blockchain-enabled platform designed to facilitate the use of fiat currencies in a digital manner.
OMG Network
$0.39993
OMG Network (first developed as OmiseGO) is a non-custodial, Layer 2 scaling solution for transferring value on Ethereum.
IntoTheBlock
IntoTheBlock is a data science company applying cutting-edge research in AI to deliver actionable intelligence for the crypto market.
Santiment
The Santiment platform gives users a 360° overview of the crypto market and its biggest driving forces.
A former hedge fund manager who retired at 36, Raoul Pal is a co-founder of Real Vision, a financial media company offering in-depth video interviews and research publications from the world’s best investors.
Chris Burniske is a partner at Placeholder, a New York venture firm that specializes in cryptoassets.
