Ethereum is currently working its way along the WD Gann 1:1 Arc just above the 38.2 % fibonacci retracement level. This was preceded by a weakening MACD and volume over the last few months as we pushed to new highs. At the moment, price continues to find resistance right along the arc and trend line. I will be waiting for a resolution of the arc and trend line, prior to considering a new trade.
FUNDAMENTALS
While we are in a pause of sorts – the many fundamental drivers for long-term bullish sentiment are worth mentioning. The current state of affairs with gas fees, being repulsive, have pushed the masses to other solutions such as Solana, Avalanche and the like – but this may be a reactionary move in many ways if we stop to consider ETH 2.0, the amount of development within the ecosystem, and a potential ETF in 2022.
ETH 2.0 / ETF
At current there are 118,516,726.81 Ethereum floating around. While there is no hard cap on ETH, I wouldn’t expect that number to get too much higher after ETH 2.0, considering a few variables remain the same.
After the transition to Proof of Stake, the supply of ETH is set to decline by 2% each year – which should burn more Ethereum than is produced with each new block. This will essentially slow the growth, shrink supply, and lead to deflation over time.
When ETH 2.0 is official – there will also be less ETH produced per block, and if usage remains steady – we will have less ETH at the end of next year. In addition, if the masses migrate back to ETH (after gas fees are resolved) – this could have further effects. We also can’t forget the prospects of ETH being approved in the states for ETFs in early 2022. There is speculation that this will take place prior to a spot ETF for Bitcoin.
For now, holding steady with an eye on price behavior at the trend line/arc.
