Ethereum, alongside many of the top ten crypto tokens, suffered a huge dip early this week on account of the marketwide Evergrande-catalyzed sell-off. The token fell as low as $2,650 on some exchanges but has since climbed up and retaken the $3,000 level.
A look at Ethereum token reserves data on the analytics sites CryptoQuant shows a continuous plunge in Ether balances on digital assets trading platforms. The amount of Ether held in all exchanges’ wallets has tumbled from 22.928 million at the start of the year to a low of 18. 519 million at present. The figures indicate a negative correlation between the price of the ETH/USD pair and the amount of Ether balances.
Institutional investors are eyeing Ethereum futures more than Bitcoin futures
A Wednesday report from the investment and financial services institution JP Morgan has shown that major investors prefer Ethereum futures to Bitcoin futures. The bank explained that the poor demand for the flagship crypto has pushed institutions like hedge funds to Ethereum. The report findings appear to suggest that Ethereum is seeing more interest from institutional investors compared to Bitcoin.
According to a Thursday story featured on Business Insider, the weak demand for Bitcoin is a ‘setback’ for the leading cryptocurrency. Bitcoin futures have been changing hands at a lower figure than Bitcoin on the Chicago Mercantile Exchange in September. The situation is different in Ethereum’s case, with its 21-day average futures trading slightly above the asset as per the investment bank.
JP Morgan strategist claims ‘Ethereum killers’ could affect Ether prices
JP Morgan cross-asset research analyst Nikolaos Panigirtzoglou recently projected that the emerging Ethereum competitors could soon bring the dominance of Ethereum down. Ethereum has established itself as the trendsetter in the smart contract world, but competitors such as Solana, Binance Chain and Cardano are slowly gaining traction.
The research analyst at the investment bank was keen to point out that more ‘Ethereum killers’ could crop up in the future, making Ethereum even more undesirable. Panigirtzoglou argued that the competitors would draw users away from Ethereum, and the shift in interest will, in turn, lead to Ether prices sinking. The strategist noted that the ‘fair value’ estimate of Ethereum is currently around $1,500, which is about half the price of the token on exchanges.
While Panigirtzoglou’s argument and projection can’t be ruled out, it will likely take some time before any of the competitors dethrone Ethereum. The token is currently enjoying a market dominance of 17.98%, second only to Bitcoin, according to data from TradingView. No other token has double digits in dominance, with the closest to it being Cardano at 3.66%.
Ethereum performance in the market
Markets recorded a huge slump early this week as the effects of the housing crisis in the Chinese real estate industry spilled over into crypto and other sectors. The debt situation affecting the Evergrande Group, which ranks as the second-biggest property firm in China by sales, triggered waves of panic that set off a wide sell-off in the market. The ETH/USD figure slid by nearly 20% late on Tuesday, having started the week above $3,300 as per coinmarketcap data.
With most investors deeming the crypto sector risky and opting for haven assets, the token bottomed out at around $2,676 on coinmarketcap. This figure was even lower on some exchanges and platforms. A response from ETH traders seeking a leg up saw the token price bounce of the multi-week low and steadily rise to above $3,100 on Thursday.
A report from blockchain data tracking service Santiment projected that Ethereum might keep climbing but only if the short-term holders don’t go for quick profits. The report bases its bullish projection on the market value to realized value (MVRV) ratio calculated on a 7-day moving average.
“Short-term wise, MVRV 7D is suggesting a bounce, but the real rally is unlikely until we get closer to the next major speculative event – The transition to Proof-of-Stake (PoS) in 2022,” the report detailed.
If short-term holders resort to profit-taking, the token price will likely swing sideways around its current range or dip below $3,000. On the other hand, if Ether successfully makes a move north of $3,200, it may get additional bounce and see full recovery around the $3,500 supply wall.
