Ethereum, the world’s second-biggest crypto at the moment is on a flying spree, and experts from the token’s momentum can speculate a massive price increase to about $5,000. Ethereum, from a merger of technical, macroeconomic, and on-chain indicators, is looking at a price-up run in this quarter of the year.
Ether, Ethereum »‘s native token has dipped by over 20% after hitting its all-time high at point $4,867 thereabouts on 10th November 2021. However, the sharp retrace in price does not indicate that Ether cannot chase a new all-time in the coming few months, as suggested by concrete technical, macroeconomic, and on-chain indicators.
One of these indicators points that ETH could reach $5,000 in the first quarter of the year 2022 while others’ appearance likely supports the bull run prediction.
1. ETH price painting falling wedge
Ethereum’s recent price retrace is drawing a likely bullish reversal pattern called the « falling wedge »
In more depth, falling wedges start wide at the top but narrow as the price falls. As a result, as the response highs and lows converge, the price action takes on a conical shape that tends lower. Only once the price convincingly breaks above the wedge’s barrier does a trader recognize a positive bias.
Following this, hopes are high that the ETH price would break above its falling wedge resistance soon. In so doing, it would move up by as much as the maximum distance between the wedge’s upper and lower trendline when measured from the breakout point.
2. ETH deposits to exchanges drop
Crypto traders moved their assets to exchange platforms when they’re about selling or trading them for say fiat currencies, stable coins, or perhaps other cryptocurrencies.
In general, a higher number of crypto transactions to a trading platform reflects a high selling sentiment market-wise. On the other hand, also, a dip in the token transaction indicates a strong holding sentiment in the market.
According to the data from Glassnode, a blockchain analytics service, the amount of on-chain Ether deposits to exchanges dipped on the 3rd of January to its 23-month low.
In addition, another Glassnode metric involved in tracking the number of ETH addresses sending Ether tokens to exchanges reported declines over the past one month, the same time frame that saw the ETH dipping up to 11% against the USD
Meanwhile, Ether’s total balance across all exchange platforms has been on the downside since August 2020, and this suggests that ETH investors are down for a very long haul as the token’s price rose from $400 to $3,800 plus in the same time frame.
3. Cheap money here to stay?
Ethereum’s plunge of about $1,000 from November last year up until now came mostly in the wake of the Federal Reserve’s hawkish turn.
The United States Central Bank decided to fast track the unwinding of its $120 billion monthly asset purchase program, followed by three rate hikes in the year 2022 from its near-nothing levels, to inflation. The bank’s loose monetary policy was one of the major factors behind similar price rallies across ETH, BTC, and other cryptocurrency markets at platfoms like bitIQ.
However, Fred’s efforts to control inflation from its present level, 6.8%, with three rate hikes might have about no impact in the long run on the prices of Bitcoin and Ethereum. Antoni Trenchev for instance, a managing partner of Nexo, a crypto loan platform, believes firmly that cheap money isn’t going away any time soon.
He further stated in an interview with Bloomberg that the biggest influencing factor for BTC and other crypto tokens in 2022 is the central bank policy. In his words:
« Cheap money is here to stay, which has huge implications for crypto. The Fed doesn’t have the stomach or backbone to withstand a 10%–20% collapse in the stock market, along with an adverse reaction in the bond market ».
Thomas Peterffy, a Hungarian billionaire said also that investors should assign at least 2-3% of their crypto assets to the likes of Bitcoin and Ethereum in case of any fiat currency catastrophe.
Furthermore, Ray Diallo, the founder of Bridgewater Associates, revealed that he has been holding Bitcoin and Ether tokens in his portfolio to guard against the risks of inflation.
