Is Ethereum Price Forming a Macro Bottom?

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As a seasoned investor with over two decades of experience in the financial markets, I have seen my fair share of market cycles and trends. The current state of Ethereum (ETH) has certainly piqued my interest, given its disappointing performance in 2024 compared to Solana (SOL).

In 2024, numerous investors are feeling disheartened about Ethereum‘s price due to its lackluster performance compared to other top altcoins which have significantly increased in value. Despite the low morale, it’s worth pondering whether Ethereum’s price is establishing a long-term low point or a ‘macro bottom’.

Is Ethereum Price Forming a Macro Bottom?

It seems highly probable that we’re approaching the bottom for ETH, according to both technical analysis and on-chain indicators. Here’s an overview of the technical reasons that suggest Ether might be creating a generational bottom prior to a significant bullish trend.

The macro bottom idea revolves around how the 50-day and 200-day Exponential Moving Averages (EMA) coupled with price action could hint that ETH could be forming a generation bottom.

This research examines the recent two major price drops and the subsequent behavior around the 50-day and 200-day moving averages, culminating in new all-time highs. Given that comparable patterns are emerging now, it is possible to anticipate that Ethereum might be experiencing a similar downturn that could trigger an uptrend or bull market.

In my research, I’ve observed that during the past two cycles, the price of Ethereum remained within a range and generally hovered under both the 50-day Exponential Moving Average (EMA) and the 200-period EMA. When an initial recovery attempt surpassed the 200-period EMA, it ultimately proved unsuccessful, leading to what appeared to be a genuine rise but turned out to be a ‘fakeout’ followed by a correction. This correction, however, served as a robust foundation for a subsequent bull run and a new All-Time High (ATH).

By October 26, 2024, it appears that Ether has finished its deceptive move and is now moving downwards, seeking a possible base. If past trends persist, then a surge in price that surpasses the 200-day moving average might signal the beginning of an uptrend, or bull run.

What is Ethereum’s macro Bottom Level?

If ETH has reached its major low at the August 4 price of $2,127, then that becomes the base for any potential upward movement. Yet, if a similar pattern in Ethereum’s price history repeats and ETH drops again, it might retest the approximately equal lows near $2,127, thereby establishing a new potential major low around $2,100 or even $2,000.

Why Everybody Hates Ethereum in 2024?

After discussing the potential for Ethereum’s price to establish a long-term low point, we’ll delve into opposing views held by some investors who predict Ethereum could plunge further or underperform. Furthermore, let’s examine investor sentiment towards Ether and hear what Vitalik Buterin, its creator, has to share on the subject.

Ethereum’s YTD Gains Fail to Woo Crypto Investors 

Over the past 300 days, or one year as of now, the value of ETH has increased by 8%. On the other hand, traditional finance assets such as Gold and the S&P500 have yielded significantly higher returns in 2024, with Gold returning 33% and the S&P500 providing a 22% return. To add to the challenge, Solana (SOL), a rival to Ether, saw an increase of over 8% within just 24 hours last week. Additionally, it’s worth noting that both Bitcoin (BTC) and Solana (SOL) have experienced substantial growth this year, with BTC up by 51% and SOL climbing 53%.

2 Reasons Why Ether Has Become a Laggard in 2024?

“It’s plausible that the subpar performance of Ethereum can be explained by two primary factors: the introduction of the spot Bitcoin ETF and the rise of Ethereum’s narrative, as well as the surge in popularity of meme coins on Solana.

Spot ETFs Remove Spotlight from ETH

The introduction of Exchange-Traded Funds (ETFs) marked a significant leap for the entire cryptocurrency sector. Although both Bitcoin (BTC) and Ethereum (ETH) have spot ETFs, institutional investors generally favor Bitcoin over Ethereum primarily because its storyline is more straightforward – ‘digital gold’. Conversely, Ethereum needs to persuade baby boomers on the concept of a ‘world computer’ or ‘smart contracts’.

Additionally, the spot BTC ETF attracted too much liqudity leaving little for ETH.

Ethereum-killer Solana Gained ETH’s Spotlight

Solana emerged as the epicenter of meme coin stories, leading many small investors to amass millions or significantly increase their wealth in mere hours or days. This explosive retail enthusiasm, driven by narratives, positively impacted SOL due to its swift transaction rates, reduced gas fees, and user-friendly applications.

Compared to Ethereum, which has a slower rate of transactions and higher gas costs, Solana (SOL) has attracted significant investment from both institutions and individual investors.

As a dedicated crypto investor looking back on 2024, I can’t help but ponder over the reasons why Ethereum (ETH) didn’t live up to its potential during that year. Among these factors, the consistent selling pressure from the Ethereum Foundation was certainly a significant factor. Furthermore, the absence of Exchange-Traded Funds (ETFs) inflows also played a role in ETH’s underperformance. Lastly, Ether’s strong correlation to Bitcoin, which was stuck in a seven-month rangebound movement, might have had an impact on ETH’s performance as well.

These factors together explain why ETH price’s returns over the past 300 days remains under 10%.

What Investors Think about ETH

The respected analyst known as Byzantine General recently highlighted a comparison between Ethereum and Solana, prompting his 207,000 followers to consider whether the broader market has entirely given up on Ethereum, asking if it’s more like they’ve walked away from $ETH altogether.

Sheldon Evans, a well-known figure in the world of cryptocurrency, recently shared on platform X: “The value of SOL has increased by approximately 400% compared to ETH, and I don’t foresee any reasons that would cause this exceptional performance to slow down.

Additionally, some other indicators provide a clear picture of Ethereum’s troubled condition. For instance, transaction fees on Solana reached an impressive $2.7 million by October 26, outstripping the Ethereum fees which stood at $2.6 million around the same time.

Here’s What Vitalik Buterin Thinks of ETH

Vitalik Buterin expresses confidence in Ethereum’s future development. He has shared his plans for upcoming updates to Ethereum (ETH), including both long-term and short-term strategies. Regarding the price of ETH, he has addressed criticisms about him and the Ethereum Foundation selling Ether. Specifically, Buterin stated…

The ETH Foundation is compensating the individuals behind:

He also mentioned that he hasnt’ “sold a single ETH in the past month” and that the total ETH he holds “has actually gone up.”

Concluding Thoughts

2024 saw Ethereum’s performance falling short of expectations, causing some investors to express doubts about its future prospects. Upon closer inspection, however, technical analysis and on-chain indicators suggest the potential formation of a major market bottom, pointing towards a substantial recovery. Although factors like Solana’s rise and Bitcoin ETF introductions have impacted Ethereum’s poor performance, Vitalik Buterin’s optimism and upcoming updates offer reasons for optimism.

At a crucial turning point, investors should consider the pessimistic outlook versus the possibility of hitting a significant low for the generation. If Ethereum surpasses its 200-day moving average, this could signal the beginning of an uptrend. Given Ethereum’s promising future, investors might reconsider their positions.

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2024-10-26 17:54