What’s Stopping Ethereum From Producing a God Candle to $5,000?

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As a seasoned analyst with over two decades of experience in the financial markets, I’ve seen my fair share of bull and bear cycles, and the current Ethereum situation piques my interest. The anticipation surrounding Ethereum surpassing the $5000 mark has been brewing for some time now, but the recent developments seem to suggest otherwise.

In simple terms, despite being the second largest cryptocurrency by market value and widely expected by investors to break the $5000 barrier, Ethereum‘s price has yet to sustain a significant upward trend, even after the introduction of spot ETFs (Exchange-Traded Funds) that boosted Bitcoin‘s value. Here are some reasons why Ethereum’s price hasn’t created a ‘God candle’ leading to $5000.

Spot Ethereum ETFs Struggle to Attract Investor Interest

Unlike Bitcoin, Ethereum-based exchange-traded funds (ETFs) have faced difficulties in attracting investor interest and capital since their launch on July 23rd. Consequently, the price of Ethereum has been falling and dropped by 23% to currently rest above the $2200 mark, having stabilized at this level.

Yesterday saw a small investment of approximately $3.06 million into the ETH ETF, with this pattern of low investments persisting throughout the week.

In May, Bloomberg’s senior ETF analyst, Eric Balchunas, pointed out one of the difficulties for Ethereum ETFs in appealing to the 60/40 Boomer demographic: finding a simple, catchy explanation similar to “Bitcoin is digital gold” that succinctly explains its purpose and value.

PlusToken’s ETH Stash Sale Triggers Market Concerns

The PlusToken cryptocurrency scheme, one of the biggest fraudulent Ponzi operations, functioned in China between 2018 and 2019. When authorities closed it, they confiscated approximately 194,000 Bitcoin and 830,000 Ethereum from the scam organizers.

Based on OTC Research findings, it appears that the Chinese government has disposed of the remaining 542,000 Ether, estimated to be worth around $1.3 billion. Over the past day, 15,700 Ether were sent to an unidentified wallet, while another 7,000 Ether moved to cryptocurrency exchanges. This transfer has sparked speculation that additional selling may be imminent.

Back in early August, the leftovers from the ETH taken in the massive PlusToken scam (worth billions) became active on the blockchain for the first time since 2021.
Within the past day, approximately 7,000 ETH out of the total 542,000 ETH worth around $1.3 billion has been transferred to exchanges, suggesting a plan to sell off the remaining Ethereum tokens.
— ∴FreeSamourai∴ (@ErgoBTC) October 9, 2024

These large transactions could delay the ETH rally to $5000.

Ether Issuance Rate Hits 2-Year High Amid L2 Growth

In September, as per SatoshClub’s reports, the rate at which Ethereum was being issued stood at approximately 0.74%. This figure refers to its value over a two-year period. The rise in supply indicates that the network is experiencing a higher inflation rate compared to what it has seen recently.

As an analyst, I’ve observed that Ethereum’s deflationary trajectory, achieved through fee-burn, has been noticeably affected following the deployment of Layer-2 (L2) solutions post-London upgrade. These L2 networks, such as Arbitrum and Optimism, provide cost-effective transaction fees, thereby attracting activity away from Ethereum’s mainnet. Consequently, this shift in activity has led to a decrease in burning activities on the Ethereum network.

As Ethereum continues to produce more coins and its deflationary mechanism fails to meet expectations, the growing supply could potentially push the value of each coin downwards.

$ETH‘s issuance rate hit ~0.74% in September, marking a 2-year high.
The path to deflation might depend on boosting mainnet activity as users flock to cheaper L2 solutions.
— Satoshi Club (@esatoshiclub) October 11, 2024

Analyst Prediction Short Pullback Before ETH Price Rally

A fresh analysis from the crypto trading entity, Inmortal, provides a glance at both short-term and long-term outlooks for Ethereum’s price. The accompanying chart indicates that Ethereum’s price might continue its current downtrend by approximately 13%, potentially reaching a support level of $2104 set over several months.

As a researcher examining the market trends, I’ve noticed a potential dip around the $2104 mark being flagged as potentially false. However, if this support holds strong, it could signal a resurgence in bullish momentum, propelling the asset to new heights, possibly reaching a peak of $4200.

What’s Stopping Ethereum From Producing a God Candle to $5,000?

If buyers can’t maintain the $2000 level, it’s likely that we’ll see a significant drop or correction in the predicted Ethereum price.

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2024-10-11 20:12