Ethereum is one of the most important cryptocurrencies in the world. Second only to Bitcoin. It’s flexible and can support complex, programmable transactions via smart contracts. ETH is the blockchain of choice for developers and enterprises alike because its system is easier on the environment than Bitcoin’s, not to mention it’s way more advanced. You can make money from changes in its price. Or you can receive passive income from staking.
Wondering why the ETH price fluctuates, and what affects the ETH prediction? Its price is determined by supply and demand, that is, how much interest there is in the market to buy Ethereum and how much is actually available. Ethereum is in a correction phase at the moment. Fees are 4x lower after the Dencun upgrade, so it’s no longer necessary to burn tokens. And this has pretty much caused ETH to turn inflationary for the first time since the Merge, which means the natural increase in supply overtakes the amount burnt in fees.
Bear in mind that all trading carries risk, and trading during a correction isn’t any different. You must be ready for the ups and downs. Which sounds easy, but it’s not. If the cryptocurrency market or your personal preferences call for a change, that’s fine, but don’t change the course just because Ethereum’s price lags competitors. Stick to your plan (if you’ve got a position) or buy the dip. Pardon? Buy the correction.
Ethereum Crash Vs. Correction: Can You Tell the Difference?
It’s easy to get confused when terms like “crash” and “correction” are tossed around way too lightly. A crash is an over-10% drop in the price of an asset within 24 hours. It’s often the result of breaking news or a development in the cryptocurrency market that causes some investors to panic and leave all of a sudden. A correction is a gradual decline that happens when a market rally gets out of hand. Put simply, there are no more bullish investors to support an uptrend, and sell orders continue to pile in even if there’s no one on the other side of the order book.
The next time you see ETH prices dip into the red, you’ll know which is which. And knowing the difference between the two can help you make better investment decisions that’ll save you time and make you money. After Bitcoin halving, cryptocurrency prices corrected sharply, So it’s interesting to see how altcoins will perform for the rest of the year. As the market heads lower, only RNDR and TON are bucking the trend. Back on topic, we can’t predict the future, but with Ethereum, you never know what could happen, so it could finish its corrective setback.
The Signs That Suggest Ethereum’s Price Correction Isn’t Over Yet
Ethereum exchanges hands at $2,999.11. But if it decides to move upward, it’ll face resistance at the 50-day moving average, which aligns with the 0.382 Fibonacci level. $3,324, that is. ETH underperformed last month, leading many to question whether its downtrend is over. All signs suggest that further decline is to be expected, so it’s necessary to exercise cautious optimism for a potential bullish rebound. Here are just a few metrics to keep in mind:
ETH/BTC Ratio Slides Down to Its Lowest Since April 2021
The prices of Bitcoin and Ethereum are interconnected, so if BTC’s price grows significantly, ETH will also increase in value during the same period of time. And the other way around. The correlation has been declining since the beginning of 2023, after Ethereum’s Shanghai upgrade, so holding both Ethereum and Bitcoin can offer more benefits than holding one or the other.
The price of 1 ETH in BTC is roughly 0.04527 BTC. Ethereum reached an all-time high price of 0.07396 BTC in 2021. The ETH/BTC ratio is an important indicator of Ethereum’s strength to Bitcoin in the cryptocurrency market, and it shows the asset has underperformed the world’s first and biggest cryptocurrency.
Network Activity Has Declined
Ethereum continues to be an important player in DeFi thanks to its robust ecosystem of dApps, smart contracts, and ongoing technological developments. Still, network activity cools off. Recent activity indicates that the Moving Average Convergence Divergence line is crossing below the signal line, which is normally considered a bearish signal, so it might be time to sell.
Daily active addresses on ETH dropped from 622,963 to 546,484. Yes, it doesn’t suggest a considerable decrease in the number of users, as many bots use the network. it’s necessary to take into account the wallets that pay for their own fees. Not to mention the retention data. Any conclusion can be considered speculative because of the inherent volatility of the cryptocurrency market.
Ethereum Tested The $3,600 Resistance Level Multiple Times
$3,600 is the price Ethereum struggles to break through. And tends to pull back. After the recent rejection from the $3,600 area, the cryptocurrency market is once again targeting the $3,000 support level. ETH shows promise, there’s no doubt about it, but it must successfully overcome this test to solidify its position. Moving above the resistance level could set the stage for further price increases.
For now, Ethereum depends on Bitcoin. Any movement in ETH’s price attracts investor attention, most of it coming from people who already own cryptocurrency or have exposure to Ethereum through a futures ETF. Speaking of which, the case for a spot Ethereum ETF is getting weaker. It’s unlikely ETFs will get approval any time soon. The SEC’s deadline is on the way, but the outlook is gloomy, and will likely affect any trading strategy, even if it’s a non-event.
Wrapping It Up
Ethereum may or may not end its stage of correction, so pay close attention to market movements and trading volumes to get an idea of its direction. Compared to Bitcoin, ETH is experiencing a downward trend. It’s possible the asset will make a comeback, but there are mixed signals as far as the price chart is concerned, so employ smart moves like diversification and allocate a portion of your portfolio to stablecoins.
