Cryptocurrency is one of the trending things in today’s world. However, the volatile nature of the market is a concern for many, especially the ones who have invested in cryptocurrency. Amid the downtrend of many crypto coins, we will be presenting a brief and comprehensive Ethereum technical analysis. So, keep reading the article till the end, as we will be telling you everything that you need to know about Ethereum and the way it is working in the crypto world.
Ethereum
Before we give you a detailed and comprehensive Ethereum technical analysis, let me first tell you a little about Ethereum. Ethereum is a global software platform powered by blockchain technology. It is very commonly known by investors for its native cryptocurrency, Ether (ETH). It was developed for use in blockchain and decentralized finance application development. If you are a crypto enthusiast, then you will know that Ethereum can be used by anyone, and it is designed to be scaleable, secure, and programmable. The token of Ethereum is created to pay for the work which is done by the block chain. However, the participants will also be able to use it for tangible goods as well as services when they are accepted
Now that you have a good understanding of Ethereum, Head to the next section of the article to decode the way Ethereum works.
How does Ethereum Work?
If you are keen on understanding Ethereum, then you have to check out this section to know more about the way this token works. Ethereum uses blockchain technology, which is a distributed ledger that acts more like a database. Blocks contain information that contains encoded data from the block before it and the new information. This helps in creating an encoded chain of information that cannot be changed.
Hence, throughout the blockchain network, an identical copy of the blockchain is distributed. Every cell or block is created with new ether tokens, which are awarded to the validator for the work that is required to validate the information in one block and propose a new one. Hence, ether is assigned to the address of the validator. After a new block is proposed, it gets validated by a network of automated programs that reach a consensus on the validity of the transaction information. Consensus is reached in an Ethereum blockchain when hash and data are passed between the consensus layer and the execution layer.
How Does Ethereum Validate Itself?
Now that you have a good understanding of the way Ethereum works Keep reading this section of the article to explore the proof-of-stake validation process, which is different from mining for validating the blocks. This process uses a finalization protocol which is called Casper-FFG, and the algorithm LMD Ghost. These two are then combined in a consensus mechanism called Gasper. Gasper basically monitors the consensus and then defines the way validators will be receiving rewards for work or are punished for dishonesty or their lack of activity
Hence, proof-of-stake can be looked at as a regulation that binds the validators from engaging in any dishonest activity in the blockchain world. Validators will be punished under the proof-of-stake for those who get involved in dishonest activity, and those who attempt to attack the network are identified by Gapser, which flags the blocks that accept and reject on the basis of the validator’s votes. Dishonest validators will be punished by having their staked ETH burned, and it will be removed from the network. If you are hearing the word “Burning” for the first time, then let me tell you that it is a term that is used to send crypto to a wallet without any private keys. This effectively takes it out of circulation.
Wallet and Ethereum
Ethereum keys are stored by owners. A wallet is basically an interface that lets you access your cryptocurrency. Your wallet has got your address which will be thought of as an email address in which the users will be sending ether, and it’s much similar to an email.
It is important to note that ether is not stored in the digital wallet that the owners have but the wallet only holds the ether keys, which are private keys that you can use as a password and you can also use it to initiate a transaction.
Ethereum Technical Analysis
As the volatile nature of cryotocurrency keeps changing, the one hour chart of Ethereum’s recent high shows that the highest amount reached is $3652 and the lowest is $3484. This trend has been bearing folowong the peak on June 21 and it is characterised by the increase in sales volume. A potential entry point is found near the support level which is at $3485 amd a reversal will be increased on buying the volume.
The four hour chart significantly shows a much wider downtrend with frequent rises that suggests possible consolidation. The recent high has reached $3656 and the lowest has reached $3358.8. These significant volume spikes has been corresponding with the major price movements and the reversal will be indicated once the price stabilises above $3500 with a high volume.
These daily charts have shown that the highest Ethereum has reached was 43980 and the lowest that it has hit was $2863. Hence, this overall Ethereum technical analysis shows a peak which is followed by a gradual decline and it is seen that trading volumes have also decreased recently. The Ethereum technical analysis has shown that a strong spike with a high volume around the $3500 support level will be a good signal for a long position.
Now that you have got a good understanding of the charts that clearly depict the Ethereum technical analysis. Head to the next section of the article to learn about the verdicts that have come up in response to these daily charts.
Verdicts
Bear Verdict
This is one of the popular verdicts to consider when looking at Ethereum trending analysis. The short-term indicators for Ethereum have reflected a bearish sentiment with recent trends as well as moving averages that point towards the continued downward pressure. Traders need to be cautious and also consider setting tight stop-loss orders around the resistance levels. This is especially when it comes to selling high volume remains that continue to remain high. In the near term, the Bear Verdict predicts that the lack of strong momentum and neutral oscillators will show a potential downside in the future term
Bull Verdict
This is another popular verdict that is to be considered when looking at the Ethereum technical analysis. As per this verdict, the long-term aspect of Ethereum remains optimistic, and long-term moving averages indicate a buying signal. Traders need to consider holding positions from entering new ones around key support levels. This indicates particular signs of reversal as well as increased buying volume. The current price stability can be seen around $3500, and there is a potential for upward movement, which suggests a bullish trend in the coming weeks.
Conclusion
As the Ethereum technical analysis shows the fluctuating nature of the ETH tokens, it is important to understand the market conditions as well. With both the verdicts seeming a bit doubtful about Ethereum’s optimistic pricing in the future, the situation seems to be bleak at the moment. Hence, it is important to understand the market conditions before investing in Ethereum at present. The Ethereum technical analysis projected a vivid picture of the blockchain environment and hence, Ethereum is highly fluctuating at this point. That’s all, folks. I hope the article will help you to get all the information you need.
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