Key Points
The price of Ethereum (ETH) has been fairly static this month. This comes as the ecosystem faces increased competition and significant hurdles.
On January 22, Ethereum was valued at $3,310. This is about 20% below its peak in November.
Meanwhile, other cryptocurrencies like Bitcoin (BTC), Solana (SOL), and Ripple (XRP) have revisited their record highs.
Ethereum has been losing its market dominance in key sectors. For example, Jito has surpassed Ethereum in terms of fee revenue this year. Jito has generated $157 million, while Ethereum has produced $112 million.
Ethereum’s Market Challenges
The decentralized exchange volume of Ethereum has also significantly fallen below that of Solana. Solana-based protocols such as Raydium and Orca have processed over $123 billion in volume in the last week. This is in contrast to Ethereum’s $26 billion. The surge in Solana’s volume can be attributed to the popularity of the Official Trump and Melania coins.
Ethereum’s price has been struggling due to ongoing token sales by the Ethereum Foundation. Additionally, exchange balances have been on the rise. According to CoinGlass, these balances have increased to 15.8 million ETH, up from 15.3 million at the beginning of January.
Despite these challenges, there are positive indicators suggesting a potential rebound in Ethereum’s price. Spot Ethereum ETFs have seen steady inflows, indicating some demand from Wall Street investors. In the past five days, cumulative inflows have risen to $2.74 billion.
Data also shows that Ethereum’s leverage ratio has been increasing in recent months. It has reached 0.6, compared to 0.24 in September 2023. Interestingly, there has been a divergence between the leverage ratio and Ethereum’s price. This could suggest further gains in the future.
Another positive sign is the consistent high level of Ethereum’s futures open interest in recent weeks. On January 22, open interest was over $30.3 billion. This is a significant rise from December’s low of $20 billion.
The daily chart shows that Ethereum’s price has met strong resistance at $4,000. This price point represents the upper boundary of a cup and handle pattern. The cryptocurrency is currently forming the handle section of this pattern.
The handle resembles a falling wedge, which is characterized by two descending and converging trendlines. Falling wedge patterns are typically bullish and suggest potential gains. Notably, ETH has remained above the 200-day Exponential Moving Average.
Therefore, Ethereum could potentially see a strong bullish breakout. The next target could be $4,000, which would represent a 21% increase from its current level.