As of recent, Ethereum price charts have been signalling weakness. However, an influx to LSDFi could potentially stave off an ETH sell-off. Nonetheless, ETH price has been battling to claim ground beyond the $2,000 level. Despite Bitcoin‘s gain by 11.94% passing $30,000 in June, after BlackRock lodged their ETF application, Ethereum’s upside remained relatively low at around 3.16%.
In the initial week of July, there was a surge of buyers attempting to steer the price beyond a crucial resistance of around $1,900. However, a failed breakout led to the vulnerability of a further decline. Additionally, Ethereum’s network witnessed reduced activity, which was reflected in lowered transaction fees over a year and plummeting prices for leading NFT collections, with DeFi activity waning due to disappointing yields.
Yet, are all the signs pointing to gloom and doom for Ethereum? It’s reasonable to consider the impact of liquid staking derivatives (LSD), such as Lido’s stETH, which has been growing at a rate outpacing that of investors looking to sell, thus indicating potential for constraining the downside. With the slowdown in primary uses on Ethereum, the increasing gravitation towards LSD suggests an opposing movement.
Glassnode, an on-chain analytics firm, reported a trend where deposits made to the staking contract have at the very least matched exchanges inflows; suggesting a shift towards staking rather than selling. Currently, total ETH placed on staking contracts accounts for 19.7% relative to the centralized exchange balance of about 12.8%. Interestingly, the trust in Ether staking deposits increased significantly after the Shanghai update was rolled out in April.
Although Ethereum had a failed breakout in July, possibility for bullish support increases as a surge in LSD narrative offers higher yields compared to the DeFi sector, thereby providing a safety net for any future downside.
Yet, the position at present regarding Ethereum is twofold. The route the price could take may either find support at the root of the ascending triangle around $1,790 before making a second attempt at the $1,900 resistance level, or continuing with a downward trajectory towards long-term resistance and support level of $1,700.
In conclusion, the current overview of the market suggests possible further decline, but the growing interest in LSD offers some optimism. The landscape remains a balance between caution and opportunity; a tug-of-war that resonates throughout the crypto market. The future for Ethereum is still to be determined, keeping the supporters and skeptics on their toes.
Source: Cointelegraph
