Ethereum - The Good, The Bad, and The "What Do We Do Now?"
Ethereum has been through quite a July, with its price being as low as $1,040 on July 1st to $1,640 just three weeks later. We may see this kind of +58% price swing from mid and low cap altcoins on any given month, but coming from ETH or BTC is much more of a rarity.
We're now less than 2 months away from Ethereum's long-awaited transition to the highly discussed proof-of-stake consensus mechanism. Are prices already showing signs of getting "baked in"? Will it be a case of "buying the rumor, selling the news?"
Well even though the crypto crowd has given its share of big social spikes...
Most are occurring near price bottoms and happening when ETH's price is on its way down, indicating lots of capitulation is happening. These are great tell-tale signals of a turnaround, particularly the last cluster of social volume spikes.
Let's take a quick look at a couple good and bad signs:
The Good (Bullish):
Daily Active Addresses
It's never a bad sign when the amount of unique addresses on an asset's network is returning to levels last seen when prices were much higher. Ethereum just made it back to over 600k active addresses for the first time since May 13th.
Weighted Social Sentiment
The crowd continues to skew toward negatively perceiving Ethereum, other than a brief glimpse of hope during what looked like it could have been a dip buy opportunity a couple weeks ago.
The fact of the matter is that there just aren't as many people talking about ETH right now, despite the rise in address activity. And the few that are seem to have a much more negative bias toward the asset that retraced ~80% from its November all-time high.
The Bad (Bearish):
Supply on Exchanges
Since late April, Ethereum's percentage of coins sitting on exchanges has steadily risen. With such polarizing prices after the big retracements in 2022, this isn't surprising. However, it is a bit concerning that the price rebound in July hasn't really done much to settle traders' worries and is keeping their coins in the places that make them most easy to execute more future selloffs.
Average Ethereum trading returns among traders in the past 30 days recently got appallingly over-inflated. In a metric where anything over +15% is a signal that a network's profits are beginning to get overheated, ETH's 30-day MVRV got up to a staggering +33%. It's settled down a bit, and is back down to +8%. But until this metric gets back below 0%, there's going to be some escalated risk to worry about while average traders are still in profit in the mid-term timeframe.
Disclaimer: The opinions expressed in the post are for general informational purposes only and are not intended to provide specific advice or recommendations for any individual or on any specific security or investment product.
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