A brief analysis by the team at Crypto Lists will help to shed some light on where this cryptocurrency may be headed.
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An interesting landscape emerges
Many experts will note that 2022 has been a less-than-stellar year for the cryptocurrency marketplace. With nearly $2 trillion dollars wiped off of the books since their unprecedented rally in 2021, some experts have dubbed these recent times a “crypto winter”.
However, it is still important to remember that such movements represent natural ebbs and flows of this decentralised marketplace. What goes up can (and will) eventually come back down. Even the most impressive rallies will eventually be followed by re-corrections; sometimes on a rather profound scale. The good news is that Ethereum bulls may soon be back in town. Why is this the case and what might 2023 have in store?
Recent Technical Trading Patterns
The value of Ether has always been closely paired with Bitcoin. Investors will therefore use the disparity between these two currencies to better track where each may be headed. Many analysts have recently observed a technical pattern known as a “cup and handle”.
This occurs when the price of an asset experiences a period of recovery that slightly resembles the shape of a cup when viewed on a classic candlestick chart. This movement then tends to be followed by a slight re-correction (appearing similar to a handle). However, the level of resistance (the neckline) remains unchanged.
Professional cryptocurrency traders view this pattern as being highly indicative of a bullish trend. Let’s note that it is often possible to measure potential profit margins by calculating the sum of the distance between the lowest and highest points of the neckline. Interestingly enough, the ETH/BTC relationship seems to be exhibiting identical movements. In this case, ETH profits of more than 60% may be on the horizon.
More Than Charting Alone
While technical analyses are always very useful when examining the movements of an assets, these hardly represent the “big picture”. It’s just as important to examine other factors.
One advantage that Ethereum has enjoyed in recent times involves relatively strong fundamentals. These are primarily associated with supply and demand. Ethereum is unique in the fact that excess supplies will be removed from the marketplace via an automatic algorithm known as EIP-1559. Sometimes referred to as “burning”, a reduction in supply generally signals an increase in consumer demand.
Another variable involves the fact that every Ethereum holder is required to allocate 32 ETH into an annual contract in order to obtain predictable yields and (in theory) a higher ROI. This proof-of-stake system serves to further reduce the supply of ETH within the blockchain.
Global Economic Concerns
Although the metrics highlighted above seem to paint Ethereum prices in a positive light, let’s keep in mind that macroeconomics still play a crucial role. Some market analysts are concerned that the global markets could very well slip back into bearish territory after experiencing a rather impressive rally in recent times. Issues such as the Ukraine crisis, rising inflation rates, a fall in consumer confidence, and frustrating labour-market constraints all weigh heavily upon the minds of investors.
The main takeaway point here is that cryptocurrencies are not yet seen as safe havens when compared to traditional tangible assets such as precious metals. Therefore, institutional traders may begin halting transactions if they perceive that the crypto markets are slipping into a more bearish pattern. This effect will likely trickle down to individual investors; leading to yet another drop in value.
Taking Movements in Stride
There is no doubt that crypto markets are buzzing in regard to where Ethereum may be headed in the coming months. Some even predict that its price could double to nearly $3,000 dollars by Q1 2023. Still, ETH will need to break through stubborn resistance levels in order to gain the necessary momentum. Perhaps more concerning is the current state of the global economy. As Europe is currently experiencing its largest conflict since the Second World War, nothing is certain in this day and age.
The professionals at Crypto Lists will therefore be keeping a close eye on Ethereum in order to better predict what the future has in store. Either way, it is a foregone conclusion that 2023 should prove to be a landmark year for cryptocurrencies as a whole.