Ethereum's growing network activity indicates potential for rally amid move above falling wedge pattern
- Ethereum network fees skyrocketed nearly 60% in the past week as investors returned from holiday.
- Stablecoin market capitalization on Ethereum reached an 18-month high as ETH eyes recovery.
- Ethereum could rally to $3,366 if it sustains a move above falling wedge.
Ethereum (ETH) is up 3% on Friday following a rise in its network fees and stablecoin market capitalization. Meanwhile, ETH is also attempting to sustain a breakout above a falling wedge pattern, which could see its price rallying to $3,366.
Daily digest market movers: Etherem's rising network activity could spur ETH ETF demand
Ethereum ETFs witnessed a second consecutive day of negative flows on Thursday after posting $20.1 million in net outflows. While other issuers saw zero flows, Grayscale's ETHE $20.1 million outflows dragged the entire category into negative flows.
A potential reason for the negative flows is the historical Q3 crypto market lull stirred by the summer holiday season. However, the outlook for ETH may change as investors gradually return from holidays.
This is visible in a shift in Ethereum's network activity in the past week, considering total fees increased by nearly 60%, per IntoTheBlock's data. Increased network fees imply growing activity within Ethereum, which could positively impact price.
Activity on Ethereum picked up significantly this week, with total fees increasing by nearly 60% as people return from holidays. pic.twitter.com/HvJhVWxaqZ
— IntoTheBlock (@intotheblock) September 13, 2024
Additionally, Ethereum's total stablecoin market capitalization reached an 18-month high on Thursday, rising to $83.31 billion. The last sustained growth in Etherem's stablecoin market cap saw ETH's price reaching a yearly high of $4,093 in March.
Ethereum Stablecoin Market Capitalization
A similar trend may occur if the Ethereum stablecoin market capitalization continues growing. Growing stablecoin market capitalization within a blockchain network shows an increased appetite for economic activities on its platform.
ETH technical analysis: Ethereum is attempting to break above a falling wedge
Ethereum is trading around $3,420 on Friday, up 3.2% on the day. In the past 24 hours, ETH has seen nearly $25 million in liquidations, with long and short liquidations accounting for $3.78 million and $21.13 million, respectively, per Coinglass data.
Ethereum is attempting to break above a falling wedge, with the upper trendline extending from July 30 and the lower trendline from August 7. A sustained move above this falling wedge could see ETH rally toward the $3,366 level.
ETH/USDT 4-hour chart
The 100-day and 200-day Simple Moving Averages (SMA) serve as a resistance on the way up. A move above these SMAs will strengthen the bullish momentum. The $2,817 resistance could also prevent a rally upward.
The Relative Strength Index (RSI) is rising and attempting to enter the overbought region. The Stochastic Oscillator (Stoch) has entered the overbought region, indicating a potential brief price correction.
In the short term, over $45.7 million worth of futures positions will be liquidated if ETH declines to $2,335, per Coinglass data.
Ethereum FAQs
Ethereum is a decentralized open-source blockchain with smart contracts functionality. Serving as the basal network for the Ether (ETH) cryptocurrency, it is the second largest crypto and largest altcoin by market capitalization. The Ethereum network is tailored for scalability, programmability, security, and decentralization, attributes that make it popular among developers.
Ethereum uses decentralized blockchain technology, where developers can build and deploy applications that are independent of the central authority. To make this easier, the network has a programming language in place, which helps users create self-executing smart contracts. A smart contract is basically a code that can be verified and allows inter-user transactions.
Staking is a process where investors grow their portfolios by locking their assets for a specified duration instead of selling them. It is used by most blockchains, especially the ones that employ Proof-of-Stake (PoS) mechanism, with users earning rewards as an incentive for committing their tokens. For most long-term cryptocurrency holders, staking is a strategy to make passive income from your assets, putting them to work in exchange for reward generation.
Ethereum transitioned from a Proof-of-Work (PoW) to a Proof-of-Stake (PoS) mechanism in an event christened “The Merge.” The transformation came as the network wanted to achieve more security, cut down on energy consumption by 99.95%, and execute new scaling solutions with a possible threshold of 100,000 transactions per second. With PoS, there are less entry barriers for miners considering the reduced energy demands.
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