Ethereum’s promised upgrades could aid price recovery, but until then…

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  • Ethereum has faced rejection from the $2.7k resistance zone since August
  • The climbing leverage ratio metric highlighted why a breakout might be unlikely

As a seasoned researcher who has navigated the cryptocurrency markets for years, I can confidently say that Ethereum [ETH] is at a critical juncture right now. The resistance at $2.7k has been a thorn in its side since August, and it’s clear that a breakout above this level might be elusive given the climbing leverage ratio metric.

Currently, Ethereum [ETH] is being traded between approximately $2,200 and $2,800. Notably, the $2,800 area has functioned as a consistent region of supply since early August. This zone also aligns with the 50% Fibonacci retracement level.

Examining the worrying price trends

For approximately 18 months now, the Ethereum-to-Bitcoin (ETH/BTC) graph has been moving downwards. Even though Bitcoin is currently trading 8% below its All-Time High (ATH), Ethereum is positioned 46.3% away from reaching its own ATH. It’s crucial to evaluate Ethereum’s performance in light of Vitalik Buterin’s proposed future update, “The Surge.” Particularly, its objectives related to the number of transactions per second and enhancing interoperability between Layer 2 (L2) solutions should be taken into account.

As a crypto investor, I’ve come to understand that an asset’s performance offers valuable insights into the market’s collective perception of its worth. However, it’s essential to remember that this perceived value can be influenced by hype and misinformation, potentially causing overvalued or undervalued assets in the process.

Since the Dencun update, inflationary concerns have played a role in shaping Ethereum’s performance, but they only represent a piece of the larger picture. Potential advancements for the Proof of Stake system and network-wide upgrades that are being considered could, if implemented, tackle matters such as network revenue, user growth, adoption, and other challenges.

Consequently, it might increase the need. Currently, a bumpy journey may be expected for ETH in its price trends.

Clues from the derivatives market

The estimated leverage ratio (ELR) is calculated by dividing the Open Interest by the exchange’s coin reserves. Coinglass data also revealed that Open Interest has risen from $10 billion to $13 billion for ETH since the second week of August.

“This information sheds light on why ELR is increasing. Yet, since the price is below a crucial barrier, it might serve as a cautionary signal to traders.

1-Month analysis of the liquidation heatmap highlights a congested zone around $2,730 due to numerous liquidation levels. On the other hand, a 3-month perspective indicates that the $2,730 to $2,850 range holds significant importance.

In addition to the price movements, there’s a high probability that a downward reversal could occur at these points, which traders should anticipate and prepare accordingly.

Read Ethereum’s [ETH] Price Prediction 2024-25

In summary, there persists an issue for the mainnet and its investors due to insufficient natural demand and a higher number of participants and transactions being conducted on L2 platforms. Additionally, technical analysis suggests that the bullish sentiment among ETH investors may not be strong enough to push the cryptocurrency’s price above $2.9k.

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2024-10-19 10:15