ETHUSD Analysis

Introduction

ETH/USD (Ethereum/US Dollar) Introduction ETH/USD represents the exchange rate between Ethereum (ETH), the second-largest cryptocurrency by market capitalization, and the US Dollar (USD). Ethereum, created by Vitalik Buterin in 2015, is a decentralized platform that allows for the development and execution of smart contracts and decentralized applications (dApps). The native cryptocurrency of the Ethereum network is Ether (ETH), and it plays a central role in powering these smart contracts. Important Points Ethereum is not just a digital currency but also a global decentralized computing platform. While Bitcoin is primarily seen as a store of value, Ethereum is known for its ability to facilitate decentralized finance (DeFi) applications, NFTs (non-fungible tokens), and more. ETH/USD is influenced by factors related to Ethereum’s network, its developments, and its role in the broader cryptocurrency ecosystem. Correlations ETH/USD often moves in tandem with BTC/USD, as Bitcoin and Ethereum are the two dominant players in the cryptocurrency market. However, ETH/USD can also have a more pronounced response to technological developments related to Ethereum, such as network upgrades or changes in gas fees. Ethereum’s price is also sensitive to the DeFi ecosystem, as its blockchain hosts many of these projects, and a surge in DeFi activity often leads to increased demand for ETH. Impact Parameters Key factors influencing the price of ETH/USD include: Ethereum Network Upgrades: Changes to Ethereum’s network, such as the transition from proof-of-work (PoW) to proof-of-stake (PoS) with Ethereum 2.0, can significantly affect ETH’s price. These upgrades aim to improve scalability, security, and energy efficiency. Decentralized Finance (DeFi): Ethereum is the backbone of many DeFi applications. The growth or contraction of the DeFi sector can have a direct impact on demand for Ether, as it is often used as collateral within these platforms. NFT Market Activity: Ethereum’s involvement in the booming NFT market also impacts its price. As more NFTs are minted and traded on the Ethereum blockchain, demand for ETH can increase due to transaction fees (gas fees). Market Sentiment: Like Bitcoin, Ethereum’s price is heavily influenced by market sentiment, with bullish trends in the crypto market typically lifting ETH’s price alongside BTC. Regulatory News: As with other cryptocurrencies, ETH/USD is subject to regulatory news and developments, such as government bans, new regulations, or acceptance in various jurisdictions. Price Drivers Network Demand: The price of ETH is driven by the demand for transactions and smart contract executions on the Ethereum network. As the network sees increased use, the demand for ETH increases. Ethereum 2.0 Upgrade: The transition from Ethereum’s original PoW consensus mechanism to the more scalable PoS mechanism is a major long-term driver for ETH. These upgrades aim to reduce gas fees and improve transaction speed, increasing Ethereum’s utility and long-term growth potential. Deflationary Mechanisms (EIP-1559): Ethereum’s EIP-1559 upgrade introduced a deflationary aspect to the network, where a portion of the transaction fees (gas fees) is burned. This reduces the overall supply of ETH and creates upward pressure on its price. Institutional Adoption: Similar to Bitcoin, institutional investment can drive significant price increases. Major financial institutions exploring or adopting Ethereum-based projects or assets can lead to more demand for ETH. Global Economic Factors: Ethereum, as a part of the broader cryptocurrency ecosystem, can benefit from periods of financial instability or low interest rates, as investors seek alternative assets to traditional fiat currencies.

Fundamentals and Interest Rates

The policy is with the current Interest rate 0%. Latest change was 0%.
On that side the Federal Reserve policy is Dovish and (FED) has set its interest rate to 4.5% by latest change, Dec 18, 2024 (-25bp).
(FED) Higher interest rates generally lead to higher returns on investments denominated in USD. This tends to attract foreign capital into USD assets.

Based on the economic and macro fundamental data, The Fundamental Bias of ETH is Weak Bullish and for the USD is Moderate Bearish.
Ziwox considering Moderate Bullish bias for this asset and we anticipate long-term price increases. and Fundamental Score for USD is 1. So, base on the Fundamental Score, we predict mid-term downside price movement.

Market Overview & Performance

In the current trading session, "London", Market risk sentiment is Classic Risk-ON. The Australian dollar and New Zealand Dollar recorded the strongest performance, while the Gold and Yen are weakest so far.

Currencies performance vs US dollar "USD"
Gold "XAU", recorded a -0.41% decrease against us dollar.
Euro "EUR", performance has been 0.11% up so far
Pond "GBP", performance has been -0.17% down as of now
Australian dollar "AUD", has risen by 0.65%
New Zealand dollar "NZD", has risen by 0.24%
Japanese YEN "JPY", experienced -0.17% fall
Swiss franc "CHF", experienced 0.13% rise so far
Canadian dollar "CAD", has gained 0.12%
Market risk sentiment is ON, This means Investors embrace risk, driving demand for riskier assets and higher-yielding currencies while safe-haven assets weaken.

Market Sentiment and Positioning

ETH COT (Commitments of Traders):

Institutions Net Position on >U.S. Dollar Index is -4282 included 16873 long, 21155 short and 1752 position changed from last week.
So they mainly have a bearish view on this asset and sold ETH for lower prices in long-term.
Last week 1752 repositioning Indicates closed positions and short-term profit-taking.

Retail Traders:

Crowd traders or Retail traders are bullish on the ETHUSD with 88% 12% ratio. 853 long pos and 150 short position.
We generally adopt a contrarian approach towards crowd sentiment and we give probability ETHUSD prices may decrease.

Technical Levels and Support/Resistance

The ETHUSD pair is approaching a critical technical support level near 2397.17.
Technical trend is BUY, If the pair continues to weaken, this support could become a good area to enter a long positions.
On the upside, there is key resistance near 2698.41. Technically, A break above this resistance could signal a shift in momentum, but need to get a confirmation in this area due to the reversal or correction potential.