ETH / USD closed at $ 2,554.78 after hitting a high of $ 2,696.68 and a low of $ 2,512.20. ETH / USD continued its uptrend for the 12th session in a row on Sunday, hitting its highest level since June 7th amid improved market sentiment surrounding the Ethereum network.
In addition, the ETH / USD rates rose on Sunday despite the rise in the US dollar rate. The greenback was high on board as the DXY hit 92.20 levels on Friday, regaining strength and capping further gains in ETH / USD. The US dollar was high as the US Federal Reserve backed traders’ hopes that interest rates will not hike anytime soon.
With the approach of the London hard fork, the equilibrium of Ethereum on the exchanges has also shrunk. In fact, it has hit consecutive lows recently. Towards the beginning of June, the cumulative balance of the exchange wallets was well above the 21 million mark. However, within two months these have dropped by over 1.5 million.
Additionally, the Forex market’s netflow indicator has shown that outflows have largely overshadowed inflows since June. Collectively, these two indicators confirmed the fact that market participants expect the price of ETH to respond positively to the upgrade. Hence, they buy additional tokens. It also highlighted the minimal selling pressure that exists in the ETH market today.
In addition, the amount of ETH plugged in has increased dramatically in the last few weeks, and ETH has locked itself in DeFi. This implies that ETH tokens that are withdrawn from exchanges do not necessarily remain inactive and that market participants play it safe before the hard fork.
Aside from Bitcoin’s price rebound of $ 30,000, Ether may have a boost from the upcoming Nov.
That London hard fork contains four Ethereum Improvement Proposals (EIP), of which EIP-1559 will activate a mechanism that would burn some of the fees paid to miners. Once it goes into effect, increased network usage will result in a higher amount of ETH being burned, slowing the growth in supply of the cryptocurrency over time.
The upgrade may attract Ether as a store of value or a deflationary asset in the eyes of some investors – a narrative that has so far mainly focused on Bitcoin. The supply of the top cryptocurrency is limited to 21 million and the output per block is reduced by 50% every four years.
According to simulations by Dune Analytics, if implemented a year ago, the upgrade would have burned more than 2.9 million coins in 365 days, representing a net reduction in supply growth of over 70%.
“The highly anticipated Ethereum London Hard Fork Event will expose users to a more flexible and affordable fee structure and introduce a mild burn effect that is billed to make Ether deflationary,” said Greg Waisman, co-founder and COO of the global payments network Mercuryo. “The coin has been on an uptrend since the weekend and we can see that building up positive sentiment about the coin will rise to $ 3,000 in the coming days / weeks after the update.”
Is It Too Early To Expect ATH?
Interestingly, the MVRV (Market-Value-to-Realized-Value) ratio at ETH has not fallen below 1 since June 2020. Essentially, this suggests that investors have made additional returns than usual in recent months. Whenever this indicator moves towards 3.7, it increases the chances of a market high.
The MVRV broke the same thing during the ETH rally earlier this year and also during the mega bull run in 2017.
At the time of going to press, the ratio appeared to be moving around the same level. In less than two weeks (from July 20 to August 1) the value of this indicator had risen from 1.50 to 2.18. If the trend continues at the same pace, the price of Ethereum could rise and hit new all-time highs within six weeks. An intensified rally is therefore to be expected in the coming weeks.
It should also be noted that this ratio has not climbed above 2 very often. Whenever it has succeeded, however, the MVRV has broken the 3.7 mark more often. The same has had an impact on the price of the ETH.
In addition, the SOPR (Spenst Output Profit Ratio) showed another interesting trend. This ratio has fluctuated around 1 since the beginning of June. A congruent trend has also been observed twice in the recent past.
During the first instance in 2019 (mid-May to the end of July) the price of the ETH rose by 67%, while the price of the old in the second instance rose by almost 112% in 2020 (mid-March to mid-July). . A hike of a similar magnitude could cause ETH to break the $ 3,500 to $ 5,500 mark in August through September.
If one looks at the status of the above-mentioned metrics, one can draw the conclusion that the ETH Bull Run is underway. When the phase mentioned above kicks in, the old price will most likely kick in again ATHs.
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