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5 factors show bulls control Ethereum price even after a 26% correction

Multiple data points show investors are strongly bullish on Ethereum price even after today’s sharp rejection at $1,160.

Republished by Plato

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On Jan. 4, Ether (ETH) price rallied to $1,160, which was followed by a 24% correction within the following four hours.

What is clear is that investors are anxiously awaiting the CME’s ETH futures launch, which is scheduled for Feb. 8. Another factor driving the current rally is that Ether miners’ balances reached a two-year low, a scenario that some analysts view as bullish.

The phenomenal growth of total value locked in decentralized finance projects has also played a part, especially considering that the metric reached $17.5 billion over the past week.

Total value locked, USD. Source: DeFi Pulse

For the time being, the flow of positive news and solid fundamentals seem to be in play for Ether, but it is still important to try and understand whether the recent crash reflects a potential local top or if it was simply a retest of $900 as a new support level.

Aside from price action and technical analysis, investors should also gauge the use metrics on the Ethereum network. An excellent place to start is analyzing transactions and transfer value.

ETH/USD price vs. transactions and transfers. Source: DigitalAssetsData

The chart above shows the indicator spiking above $4 billion in daily transactions, a 73% increase when compared with the previous month’s $2.6 billion. This noticeable increase in transaction and transfer value signals strength and also suggests that Ether price is sustainable at the current levels.

Exchange withdrawals are paused for now

Increasing withdrawals from exchanges can be caused by multiple reasons, including staking, yield farming and buyers sending coins to cold storage. Usually, a steady flow of net deposits indicates a willingness to sell in the short term.

ETH/USD price (right) vs. exchanges net ETH flow (left). Source: CryptoQuant

From Dec. 1 to 19, exchanges faced net withdrawals of 600,000 ETH. This move signals a potential accumulation from whales, either transferring to cold wallets or putting those Ether into the DeFi ecosystem.

It is worth noting that over the past two weeks, there has been some stabilization. Selling activity was expected as Ether price peaked, and this led to larger deposits. Therefore, the indicator stands slightly positive.

The futures premium peaked, but nothing abnormal has occurred

Professional traders tend to dominate longer-term futures contracts with set expiry dates. By measuring the expense gap between futures and the regular spot market, a trader can gauge the level of bullishness in the market.

The three-month futures should usually trade with a 1.5% or higher premium versus regular spot exchanges. Whenever this indicator fades or turns negative, this is an alarming red flag. This situation is known as “backwardation” and indicates that the market is turning bearish.

Mar. 2021 ETH futures premium. Source: Digital Assets Data

The above chart shows that the indicator peaked at 6.4% on Jan. 4 as Ether touched its highest price since May 2018. The current 4.7% rate above equals a 20% annualized premium and is significantly above the levels seen in previous months. This data shows that despite the recent $280 dip, professional traders are still confident in Ether’s price potential.

Spot volume spiked throughout the rally

In addition to monitoring futures contracts, profitable traders also track volume in the spot market. Breaking resistance levels on low volumes is somewhat intriguing because, typically, low volumes indicate a lack of confidence. Therefore, significant price changes should be accompanied by robust trading volume.

ETH aggregate spot exchanges volumes. Source: Coinalyze.net

The previous two days saw an impressive $8 billion average volume, and this is considerably higher than the trend of recent weeks. New price highs accompanied by volume spikes are an excellent indicator of sustainable price levels.

This event holds especially true considering that the recent 42% move occurred since Dec. 30, when traditional markets closed. Had there been low volume days recently, investors would question what was really behind the surge to $1,160.

Options put-call ratio

By measuring whether more activity is going through call (buy) options or put (sell) options, one can gauge the overall market sentiment. Generally speaking, call options are used for bullish strategies whereas put options for bearish ones.

A 0.70 put-to-call ratio indicates that put options open interest lag the more bullish calls by 30% and is therefore bullish.

ETH options put-to-call ratio. Source: Cryptorank.io

Since Dec. 25, investors have been trading a higher volume on put options. Therefore, the indicator increased to 0.81 from 0.65. This signals a trend reversal from a more bullish move that lasted two weeks. Despite the protection-seeking movement, put options still lag the more bullish call options by 19%.

This data is very encouraging, considering that Ether has rallied 60% since Dec. 25, yet there is no sign that investors have flipped to more neutral-to-bearish (put option) strategies.

Despite some signs of weakness after Ether tested its $1,160 high on Jan. 4, each of the five indicators discussed above has held a bullish level.

As Ether managed to recover quickly from its recent sub $900 dip, investors gained further confidence that the uptrend hasn’t been broken.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.

Source: https://cointelegraph.com/news/5-factors-show-bulls-control-ethereum-price-even-after-a-26-correction

Blockchain

65% Say They Would Consider Selling Bitcoin If The Price Reaches $100,000

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The cryptocurrency market has enjoyed the past several months with impressive gains, including all-time highs for bitcoin and several more tokens.

As such, a couple of crypto analysts initiated Twitter polls to ask the community when they plan to sell their positions and realize profits.

How Much Would You Sell At The Next BTC Top

The primary cryptocurrency has led the 2020/2021 bull run. Bitcoin had quadrupled its value since early October when it dabbled with the $10,000 mark to an all-time high of $42,000 charted earlier this year.

Despite retracing with a few thousand dollars, BTC is still about 10% up in 2021 alone. This has raised discussions within the community if or when most plan to dispose of some of their holdings.

Crypto analyst Josh Rager took it to Twitter to ask: “how much Bitcoin from your holdings do you plan to sell at the next peak high?”

Interestingly, the answer that received the most votes (34.4%) suggests that investors plan to dump most, if not all, BTC holdings in case of another price peak.

However, it’s also worth noting that a very close percentage (31.6%) said that they would sell less than 25% of the BTC positions.

While some comments indicated that many investors plan to hold their coins even beyond the next peak, others noted that each cycle has its top and subsequent retracement. Consequently, they advised even the most die-hard HODLers to consider profit taking at some point.

At What Price Would You Sell?

Another poll initiated by the popular analyst Filb Filb shed some light on the price targets that BTC investors are looking for to sell.

The majority of the participants noted that they would start to “think hard about selling some bitcoins” once the asset price goes into a six-digit territory. Over 40% would do that at prices ranging from $100,000 to $300,000, while 26.3% would wait to see BTC beyond $300,000.

However, Nugget News’ Alex Saunders opposed the idea of expecting a fiat price to sell the BTC holdings, especially during these times of economic uncertainty:

“Those who fully understand Bitcoin know there is no fiat price you should sell for if they are increasing M1 & M2 by 30% unless you absolutely must purchase something tangible that is of great value to you personally.”

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Source: https://cryptopotato.com/65-say-they-would-consider-selling-bitcoin-if-the-price-reaches-100000/

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Blockchain

Why Bitcoin denominated payments won’t be mainstream anytime soon

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The support of top payment giants like PayPal is promising for building the case of mainstream Bitcoin payments. However, Bitcoin’s rapidly increasing price in the USD poses a tough challenge for the adoption of Bitcoin denominated payment systems. A number of altcoins are rallying alongside Bitcoin, and making payments in cryptocurrencies may not be the preferred choice for many. Just as Nic Carter, Partner at Castle Island Ventures puts it in his talk with Frances Coppola, renowned economist, and author, “I always regret it when I buy stuff with Bitcoin”. With returns of nearly 27.6% YTD, Bitcoin payments may not pick up anytime soon. Denominating Bitcoin in the USD makes it a lucrative investment opportunity and limits its adoption to traders and investors looking at it as a wealth-generating high-risk, high-ROI asset. This limitation is sure to hinder the adoption of Bitcoin denominated payments. 

The volatility and network momentum that is critical to Bitcoin’s adoption is a double-edged sword. The same volatility that is increasing the price, is making it less lucrative for traders and individuals to part with their Bitcoin. Through active involvement and buying from institutions, the bull run may receive boosts from time to time, however, the impact may end there. With regard to Bitcoin’s growth, this may not be the ‘Eureka’ moment that maximalists and proponents have waited for. It is more likely that the current price rally is an incentive to trade and adopt, however, adoption may be the game-changer. 

Currently, the number of transactions has exceeded the monthly volume since January 2017 based on data from Statista. 

Why Bitcoin denominated payments won't be mainstream anytime soon

Number of Bitcoin Transactions/ Monthly transaction volume || Source: Statista

The chart shows that the number of transactions in January 2021 has exceeded that of the past 3 years since January 2017. However, even the current transaction volume is nowhere close to the expected transaction volume. When mainstream adoption kicks in, transaction volume and price may no longer be significant metrics, as more critical metrics like transaction processing time, settlement time on exchanges, deposit and withdrawal time to and from wallets would be of greater significance. Until then, Bitcoin’s mainstream adoption may be a pipe dream. 

Source: https://ambcrypto.com/why-bitcoin-denominated-payments-wont-be-mainstream-anytime-soon

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Blockchain

Cardano, Cosmos, BAT Price Analysis: 17 January

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Cardano flipped the $0.32 to support and showed that it was on the verge of breaking past $0.385 resistance as it neared its 2-year highs. Cosmos posted rapid gains over the past few days and was retracing some of those gains. Basic Attention Token was rejected once more at a level of resistance that has been steadfast since late November.

Cardano [ADA]

Cardano, Cosmos, BAT Price Analysis: 17 January

Source: ADA/USDT on TradingView

The price of ADA has grown enormously over the past month as it nears highs last seen in May 2018. The $0.385 level can be expected to offer resistance.

A double-top formed in the region of $0.32 saw ADA initially rejected a week ago, but since, the level has been flipped to support. The Directional Movement Index showed that a strong uptrend was on the verge of being established, as the ADX crept up toward the 20 value.

In other news, Charles Hoskinson commented on Jack Dorsey’s Twitter post about a decentralized standard for social media and expressed that the crypto sphere could contribute value.

Cosmos [ATOM]

Cardano, Cosmos, BAT Price Analysis: 17 January

Source: ATOM/USD on TradingView

ATOM formed a rising wedge, and closed beneath it to test support at the $5.2-$5 region, and saw a strong surge thereafter. It reached a local high of $9.6 rapidly but might be forced to retrace some of those gains.

The Fibonacci retracement tool showed that the 38.2% level at $7.48 is in close proximity to the $7.5 region that has previously acted as a pocket of liquidity. There is also the $7.8 level of support immediately above to halt selling pressure.

The MACD, which had been strongly bullish over the past week, might soon see a bearish crossover form to indicate short-term bearishness.

The $7.8-$7.5 region is of vital importance. Defense of this region will pave the way for a move to the upside while losing this region will see a further retracement to the $6.9 level.

Basic Attention Token [BAT]

Cardano, Cosmos, BAT Price Analysis: 17 January

Source: BAT/USD on TradingView

The $0.27 has been a level BAT has failed to flip to support since late November, despite testing it several times. The range formed (cyan) grows in importance the longer BAT trades within it.

The past few trading sessions saw a strong surge just past $0.27, but subsequent selling pressure forced the price back beneath and indicated yet another rejection. This development points at a move back toward the mid-point at $0.232 for BAT.

The Stochastic RSI and the RSI were dropping lower at the time of writing.

Source: https://ambcrypto.com/cardano-cosmos-bat-price-analysis-17-january

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