3 Potentially Bullish Catalysts for Ethereum’s June Price
As of June 1, ETH had fallen by more than 40% after hitting an all-time high of $4,384 in May.
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Comparing ETH (black) and BTC (blue) bull runs in 2017-2018, 2020-2021. Data source: ADVFN
ETH surged more than 4,500% after bottoming out in March, before erasing nearly 60% of those gains in just two weeks of trading in May. Chambers pointed out that ETH still has a downside risk. and added that ETH may require"three and a half years"to return to historical highs.
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ETH365-day Market Value to Realized Value Ratio (MVRV). Data source: Santiment
Since May 11, figures for this metric have dropped from 120% to 57%. The number of profitable investors with ETH portfolios is on the decline after the price crash on May 19. This in turn increases the likelihood that investors who are still in profit will sell their ETH positions in order to minimize their downside risk in the event of a prolonged price decline.
In the pessimistic situation, there have also been arguments in support of an early pullback in ETH prices.
Major network upgrade due in July
Investors still have a month to adjust their bias on ethereum as it prepares for a major network upgrade, expected to arrive in July.
The Ethereum Improvement Proposal 1559 (EIP-1559) update is expected to eliminate a major problem with the Ethereum network: high gas fees. Ethereum will be upgraded by upgrading"first price action"This is achieved by replacing the charging model with basic network fees based on fluctuations in network demand.
Vitalik Buterin and Eric Conner, the author of EIP-1559, expect the update to create a more efficient fee market and simplify the gas payment process for users and DApps.
At the same time, EIP-1559 also proposes burning transaction fees, thereby introducing a deflationary mechanism for the Ethereum ecosystem. Its impact on the price of ETH could be similar to the impact of the Bitcoin halving on the price of Bitcoin, with lower supply versus higher demand causing the price to rise.
Nonetheless, some believe that EIP-1559 is not as bullish for ETH as it appears on the surface. Kyle Samani, managing partner of Multicoin Capital, believes that if the price of ETH rises, the cost of using Ethereum will still become higher.
OKEx analyst Rick Delaney believes that it is prudent to regard EIP-1559 as the reason for ETH's bullishness. The proposal would make ethereum attractive to wealthier investors, he added.
"A potentially deflationary ETH that could enhance its appeal in the eyes of the wealthiest investors on earth thanks to EIP-1559's fee burn mechanism,"Delaney said in April."Also launching a tracking service as part of the ongoing Ethereum 2.0 upgrade appears to be helping the current uptick in demand."
The amount of ETH on exchanges keeps decreasing
Recent Glassnode data shows that ETH prices continue to flow out of exchanges even after a 40% plunge.
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The ETH balance on the exchange has an inverse relationship with the ETH price. Data source: glassnode
Continued ETH withdrawals suggest that traders either want to hold their cryptocurrencies in anticipation of higher future dollar-based returns, or deposit them into decentralized finance (DeFi) liquidity pools for steady rate returns .
Breakthrough in technical structure
At least two independent analysts believe ETH prices have resumed a bullish trend based on technical indicators.
PostyXBT envisions ETH trading inside an ascending triangle pattern, the first concrete structure formed after the pair corrected from $4384 to $3590.
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ETH/USDT technical indicators for June according to PostyXBT forecast. Data source: TradingView
"There is nothing to do or trade right now, I'm just watching."The pseudonymous analyst added.
"Under these market conditions, there is no reason to be aggressive. Lower lows invalidate this idea."
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ETH trade setup as predicted by The Crypto Cactus. Data source: TradingView
The analyst, like PostyXBT, cautioned that traders could enter longs at ETH’s current resistance trendline (a horizontal line near the $2500-$2600 region).
"Avoid using leverage at all, because the spot is volatile."they added.
Compilation: Bibabu
Compilation: Bibabu
