Ethereum is inclined to explore lower levels and is exerting pressure on support at $1,800 as volatility dwindles to historical lows across the market. The largest smart contracts token, worth $219 billion is also experiencing shrinking trading volumes to $4.5 billion on Wednesday.
Down 1.4% in the last seven days, Ethereum is trading at $1,827. Attempts to weaken resistance at $1,850 have failed numerous times but show the likelihood of an extended rout below $1,800.
Ethereum Undervaluation Suggests A Swift Rebound
Ethereum has been trading in a range between $1,600 and $2,000 since March apart from a single outburst in mid-April that propelled it to highs slightly above $2,100. This rally had been triggered by the launch of the Shapella upgrade, which completed the transition to a proof-of-stake (PoS) consensus algorithm ensuring investors could withdraw staked rewards from the Beacon Chain.
The lack of market-moving events and a generally dilapidated crypto market structure has limited Ether movements and continues to do so, especially with volatility dropping to record lows.
According to insights by CryptoQuant, ETH has from January 1 to August 15 consistently hovered between the 1.5k and 1.6k range.
Ethereum Realized vs. Market Price | CryptoQuant
Based on the chart, “this line represents the average “break-even” price at which Ethereum holders neither gain nor lose money,” analyst Woominkyu added. “Whenever the market price drops below the realized price, it swiftly bounces back, suggesting the market sees Ethereum as undervalued during those moments.”
The outlook on the daily chart affirms the ongoing consolidation with the Moving Average Convergence Divergence (MACD) indicator leveling slightly below the mean line (0.00) with no signs of momentum either up or down.
ETH/USD daily chart | Tradingview
ETH price faces immediate resistance at the 100-day Exponential Moving Average (EMA) (blue) at $1,840. As pressure increases, support at $1,800 is stress-tested and must hold to keep the bullish outlook intact.
However, there is a glaring possibility of declines extending below $1,800 and subsequently the 200-day EMA (purple) as Ethereum seeks fresh liquidity to bounce out of the upper range limit at $2,000.
Traders may have to be cautious if ETH price sinks below the 200-day EMA as this could implore investors to sell with the idea of buying later when the token ultimately confirms a trend reversal.
As discussed in a previous analysis, Ethereum is nurturing a potential inverse head and shoulders breakout, targeting highs around $2,424 if confirmed. However, before this breakout, bulls must strive to bring down resistance at $1,850 and $2,000 and this may involve a drop to the lower range limit around $1,600 to sweep through liquidity.
Volatility Shares Plans to Launch Ethereum Futures ETF
The race for a spot Bitcoin exchange-traded fund (ETF) has intensified in the last few months, with experts believing that its approval by the Securities and Exchange Commission (SEC) would be the factor that triggers the next crypto bull market.
As the market awaits the SEC’s deliberations, Volatility Shares has announced plans to launch ETH futures ETF trading on October 12. According to Wu Blockchain journalists, the company “introduced in the SEC filing on July 28 that the ETF will invest in cash-settled Ethereum futures contracts traded on the CME, and will not invest directly in Ethereum.”
VolatilityShares announcing they intend to list their Ether Futures ETF on Oct 12th (which would be a day or two ahead of the rest of pack (if the 75 days is adhered to).. they did same thing w $BITX pic.twitter.com/hhFtk32f4X
— Eric Balchunas (@EricBalchunas) August 15, 2023
This development follows the successful launch of the first 2x Bitcoin ETF (BITX) in July. Volatility Shares believes the ETHU will be a good addition to its product offerings but has plans for the spot markets.
It is too early to tell if an Ethereum futures ETF will have an impact on the price, but the development is significant for the mainstream adoption of the largest smart contracts token.
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