- 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.
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.
Cryptocurrency metrics FAQs
The developer or creator of each cryptocurrency decides on the total number of tokens that can be minted or issued. Only a certain number of these assets can be minted by mining, staking or other mechanisms. This is defined by the algorithm of the underlying blockchain technology. Since its inception, a total of 19,445,656 BTCs have been mined, which is the circulating supply of Bitcoin. On the other hand, circulating supply can also be decreased via actions such as burning tokens, or mistakenly sending assets to addresses of other incompatible blockchains.
Market capitalization is the result of multiplying the circulating supply of a certain asset by the asset’s current market value. For Bitcoin, the market capitalization at the beginning of August 2023 is above $570 billion, which is the result of the more than 19 million BTC in circulation multiplied by the Bitcoin price around $29,600.
Trading volume refers to the total number of tokens for a specific asset that has been transacted or exchanged between buyers and sellers within set trading hours, for example, 24 hours. It is used to gauge market sentiment, this metric combines all volumes on centralized exchanges and decentralized exchanges. Increasing trading volume often denotes the demand for a certain asset as more people are buying and selling the cryptocurrency.
Funding rates are a concept designed to encourage traders to take positions and ensure perpetual contract prices match spot markets. It defines a mechanism by exchanges to ensure that future prices and index prices periodic payments regularly converge. When the funding rate is positive, the price of the perpetual contract is higher than the mark price. This means traders who are bullish and have opened long positions pay traders who are in short positions. On the other hand, a negative funding rate means perpetual prices are below the mark price, and hence traders with short positions pay traders who have opened long positions.
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