Ethereum fundamentals remain solid
Still, nothing has changed and Ethereum’s fundamentals remain solid. Since hitting a cycle low just below $1,000 in June 2022, Ethereum prices have more than doubled.
On December 20, Ethereum advocate and educator Anthony Sassano released his “mild bull case” for the network in 2024.
Multiple catalysts could push Ethereum to even surpass Bitcoin in 2024, despite its failure to do so in 2023.
He pointed to the possibility of spot ETH exchange-traded funds being approved in 2024. However, on December 18, the SEC delayed its decision on the Hashdex Nasdaq Ethereum ETF and the Grayscale Ethereum Futures ETF. It may test the waters with a Bitcoin product before approving Ethereum-based spot ETPs.
The Dencun upgrade will be deployed in March or April. This heralds the scaling improvements of EIP-4844 while also reducing gas costs on layer 2.
Layer-2 activity has surged recently and is currently at an all-time high, with the total value locked across the ecosystem reaching a record $16 billion, according to L2beat.
Sassano also noted that non-EVM Layer 2s like Eclipse and Fluent are being launched, which brings new types of applications and developers. He said that crypto games will also be largely based on the L2 ecosystem.
He added that wallet user experience will continue to improve rapidly,
“Onboarding millions of new users into the Ethereum ecosystem.”
Finally, the tokenization of real-world assets continues to evolve, bringing more “old world” financial products onto the chain.
No bull market is a bull market driven by a single concept
Especially when Ethereum’s institutional holdings are so large and its user base is so broad, the concept of Ethereum is bound to be unavoidable.
You have to believe that, on the basis of having a certain level of liquidity, there has never been a coin that has been pushed up spontaneously by retail investors, never.
The same is true for the inscription market! Fair launch is a story and a concept. Absolute fairness cannot exist!
I firmly believe that every sector will wait for its own spring, and everything is just a matter of time.
I think there are only three main contradictions in ETH at present:
First, people see the contradiction between the BTC ecosystem breaking new highs and Ethereum moving slowly forward;
Second, there is a short-term contradiction between the expectation that BTC will almost certainly pass the spot ETF and the fact that Ethereum has been criticized by the SEC as a security.
The third is the contradiction between the rapid development of the BRC effect and the lagging development of Ethereum Cancun upgrade and L2 network! These three contradictions are actually solvable contradictions, it just depends on how the promoters promote them. In other words, all solvable problems are just a matter of arranging hype time. In fact, as long as Ethereum does not have systemic risks or collapse risks, it is not a problem.
The bull market has begun, and I am still very optimistic about Ethereum. Although my current Ethereum position is not large, I will exchange some back when the BTC/ETH exchange rate is better at the right time, probably around February.
Ethereum requires us to be patient
I believe that the truly large-scale applications and technologies of blockchain currently need to be based on Ethereum. Ethereum has the most developers and stability in the blockchain world. The current FOMO sometimes gives us an illusion that technology is not that important, but in fact, sometimes slow is fast. All the current FUD is based on the contradictions I mentioned above.
In fact, technically speaking, Ethereum has good fundamentals and still has the most powerful blockchain ecosystem. The irrational market makes Ethereum undervalued. Hot money and retail investors entered Bitcoin asset categories such as brc20 in advance, diverting funds and attention. Ethereum's fundamentals are actually getting better. ETF/Layer2/Cancun upgrade/account abstraction are all cutting-edge advances in the blockchain ecosystem.
Coupled with the current Ethereum lock-up and deflation mechanism, as well as the support of L2 projects such as BLAST, a large number of Ethereum is pursuing stability.
Ethereum Price Outlook
Ethereum price continues to hold above the critical support at $2,147, and the bullish thesis remains intact even after Ethereum broke out of an ascending parallel channel. Nevertheless, bears remain in the driver’s seat, as evidenced by the relative strength index (RSI)’s position below the 50 level and the red histogram bars of the Awesome Oscillator (AO), which continue to pull towards the zero line.
Additionally, the Moving Average Convergence Divergence (MACD) indicator shows its histogram bars in positive territory after crossing below its signal line (orange band).
The increase in selling pressure could cause Ethereum prices to drop by 5% and lose the $2,147 support level before testing the supply barrier to turn into a bullish breakout in the $2,048 to $2,107 range. A breakout and close below the $2,075 midline would confirm the continuation of the downtrend.
In the worst-case scenario, Ethereum prices could fall further and test the $1,935 support level, a level last seen in November. Such a move would represent a 10% drop from current levels.
On the other hand, if investors on the sidelines enter the market, Ethereum price could revisit the ascending channel above $2,293. A candlestick close above this level would invalidate the bearish thesis, setting the tone for ETH to target the range high of $2,403 next.
In a highly bullish scenario, Ethereum price could break out of the channel and reach the $2,500 level, a move which would represent a 15% gain from current levels.
