The entire cryptocurrency market is still wobbling after the collapse triggered by the Terra UST decoupling fiasco. As we explained in a previous post, even flagship Bitcoin has remained stuck in a narrow range since the crash and has yet to show any major signs of recovery. And ethereum seems to be no exception.
Die price behavior
Technically, there is little chance of a near-term recovery for top shanzhai coins. In fact, a close look at the past few weeks suggests that it is currently in the process of jumping in a descending triangle, and a convincing break below the bottom trend line could be disastrous.
It's also important to note that while the Ethereum blockchain's Ropsten test network successfully "merged" -- moving from the PoW executive layer to the Beacon chain's PoS consensus chain on June 8 -- it had no impact on the price (or optimism) of the token.
So even if there are no problems -- ironically, people start to worry about the market, especially its volatility.
Say wow... ?
Yes, that could be one of the many reasons ethereum isn't doing so well on charts. Open interest in Ethereum perpetual futures, for example, has been falling over the past few days, actually since early June.
This suggests that derivatives traders are reducing their exposure to assets and are most likely to be worried about the coming volatility and mitigate some of the risk.
Meanwhile, ethereum permanent futures trading volumes have also been falling, dropping sharply between June 8 and 9 -- adding further weight to the argument.
All is not well
While prices have not responded well to the first successful merger on Ropsten's test network, ETH 2.0 pledges have been steady. Total deposits for ETH 2.0 deposit contracts have been very stable and rising - providing much-needed support for the merger and its eventual consequences.
Meanwhile, more than 53 per cent of supply remains profitable, despite the massive collapse of the past few months. So further falls triggered by panic selling seem low. Unless, of course, the main whale account is heavily booked for profit.
Also, according to Glassnode, the percentage of profit in circulation supply is the percentage of existing tokens whose price was lower than the current price at the time of the last move.
So, taking note of all the points above, Ethereum can be considered in a consolidation phase, and buying on dips may be a foolproof strategy to move on. But with sentiment still impressively subdued, further rout cannot be ruled out.