In a recent analysis, ITC Crypto founder and CEO Benjamin Cowen pointed out a wedge chart pattern in the current cycle of Ethereum that is reminiscent of patterns seen in previous cycles, albeit on a much larger scale. He highlighted the ETH/BTC structure bottoming out after an interest rate cut in 2019 and suggested that history might repeat itself with an impending rate cut next week. Additionally, MN Consultancy founder Michaël van de Poppe noted a bullish divergence with a recent higher low on the ETH chart, hinting at a potential break in the downward trend. This optimistic outlook could mark a significant shift in the market sentiment.
Price Movement and Support Levels
Currently, ETH prices are trading up 2.6% at $2,345, showing signs of recovery after hitting a low of just below $2,200 on Sept. 7. This recent low was only slightly higher than the drop experienced in August, indicating a strong support level. Despite this bounce back, Ethereum has underperformed compared to Bitcoin, with a 46% drop from its 2021 high in mid-March. One of the reasons behind this underperformance is the growing concern over diminishing network fees and an inflationary supply issuance. The support for EIP-4844 by Coinbase is believed to have triggered the shift towards inflationary issuance and the decline in fees. Additionally, the surge in users on the layer-2 network, Base, has been described as ‘parasitic’, with a notable increase in network revenue.
Network Growth and Utility
On Sept. 9, on-chain analytics platform Santiment reported a four-month high in Ethereum network growth, with over 126,000 new wallets created in a single day. This surge in network activity is seen as a positive sign of rising utility and adoption. In fact, this is the highest number of new Ethereum wallets created in a day since May 5. Moreover, ETH prices have increased by 7% since the weekend, sparking speculation about a potential recovery. Santiment analysts have drawn a correlation between network growth and price action, suggesting that major rises in network activity could indicate a forthcoming price reversal.
The current state of Ethereum is characterized by a mix of chart patterns, price trends, and network growth. While there are challenges such as underperformance compared to Bitcoin and concerns over network fees, the positive indicators of network growth and potential price recovery offer hope for the future of Ethereum. Investors and analysts will closely monitor these developments to gauge the direction of the market in the coming weeks.