As July approaches, Ethereum ETFs, which received a partial green light from the U.S. SEC on May 23, are close to their official launch. Many investors are wondering whether the price of Ethereum (ETH) will follow Bitcoin’s (BTC) reaction to its related financial instruments in January.
The answer, however, lies in the future, which could begin in a matter of days. In the meantime, on-chain analysis provides actionable insights that can predict whether the altcoin is following a likely pattern.
Altcoin Investors Are in a Good Mood
The change in registration documents is one of the factors that has delayed the live trading of Ethereum spot ETFs. However, in a recent interview, SEC Chairman Gary Gensler confirmed that things are going well.
Additionally, a report from unnamed sources at the regulatory agency reveals that the products will be launched on July 4.
Following the development, Journal du Token has been monitoring holders’ behavior towards ETH. According to our findings, ETH holders display a strong confidence in the cryptocurrency. We discovered this after examining the LTH-NUPL provided by the analytics platform Glassnode.
This metric stands for Long Term Holder-Net Unrealized Profit/Loss. It measures the behavior of holders who have owned a cryptocurrency for more than 155 days. As shown in the chart below, different colors exist for different sentiments.
While red indicates capitulation, orange signifies fear. Yellow indicates optimism, while blue suggests greed. Currently, Ethereum’s LTH-NUPL is in the belief zone (green). When this happens, long-term investors are confident about an upcoming price increase.
However, ETH has seen a 12.75% decline in the last 30 days as it trades at $3,365. In situations like this, the overall sentiment is expected to be bearish. So, while the perception is leaning towards confidence, the much-awaited development seems to be the reason. If it holds up till the launch day, it can propel higher demand for ETH.
Ethereum Takes Over Bitcoin
Meanwhile, perception alone cannot move prices. Therefore, we evaluate another indicator that can affect the altcoin price, namely the ETH/BTC ratio. This ratio indicates whether Bitcoin is outperforming Ethereum or vice versa. More precisely, if the ETH/BTC ratio is high, it means that ETH is outperforming Bitcoin.
However, a low ratio implies that BTC is outperforming ETH. At the time of writing, the ratio is 0.055, which is up 2.33% over the last seven days. This means that today, one ETH can buy 0.055 BTC.
Ratio ETH/BTC. Source : TradingView
If the ratio continues to increase, Bitcoin’s market dominance will decrease. Thus, Ethereum can move higher while its price can climb much higher. Considering Bitcoin’s performance, the price has increased by 56.95% in less than two months after its approval.
If ETH follows a similar trend, the cryptocurrency’s value will reach $5,308 before the end of the third quarter (Q3). Now, let’s take a look at the altcoin’s short-term potential.
ETH Price Prediction: It is not taken into account
According to the daily chart, the 20 (blue) and 50 (yellow) exponential moving averages (EMA) are above the Ethereum price. EMA stands for “exponential moving average.” It is an indicator that measures the direction of the trend over a given period.
When the EMA is below the price, it indicates that the bulls are defending it. However, the fact that the indicator is above the price lends credence to the bearishness. If the conditions remain the same, ETH could drop to $3,278. This position also shows that ETH is not priced in yet.
In simple terms, this means that the economic impact of the upcoming development has not yet been reflected in the current market price. It can therefore be assumed that the value still has the potential to increase.
However, both EMAs are about to reach the same point. If this happens, ETH price will move sideways, potentially consolidating between $3,355 and $3,610. However, if the 20-EMA reverses the 50-EMA (bullish crossover), the altcoin could end up in the resistance at $3,866.
Ethereum Daily Analysis. Source: TradingView
In a very bullish scenario, ETH could replicate its performance between February and March, reaching $4,059 before the end of July.
Additionally, the value of inflows is one of the main concerns of investors. According to online comments, a number of analysts are not sure that Ethereum ETFs can generate the same volume as Bitcoin.
However, a previous forecast put inflows at $569 million per month. If Ethereum manages to match this volume, a rally beyond the altcoin’s all-time high could occur in a short period of time.
But if the response to this development is “lots of talk, no action,” the price of ETH could fall, perhaps reaching another 10% drop.
