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Ether or Bitcoin
Fidelity Digital Assets had made optimistic forecasts for ETH for the next 12 months. Meanwhile, another study by CryptoVantage found that 47% of investors expected Ether to “outperform” Bitcoin.
Fidelity Digital Assets released its “Q7/18 signal Report” on the 2nd. 2023, arguing that the prospects for Ether are positive for the next 12 months and in the long term.
Ethereum (ETH) has risen by 62% since the beginning of the year, but although this investment company may be bullish on Ether in the short term, it does not think that the 1-month bullish channel persists.
Institutional investors like Fidelity Digital Assets may have a long-term bullish view of the price of ETH, but let’s compare them to network and market data to determine if their analysis is targeted.
In addition to technical indicators, Fidelity’s optimistic prospects for ether can be explained by the high network burn rate when issuing coins, the “new address momentum” and an increase in the number of network validators.
According to the Fidelity report, net issues have led to a net decrease in supply of over 700,000 ethers since the merger in September 2022.
In addition, the analysts say that Glassnode’s data, which shows an increase in the number of Ethereum addresses being traded for the first time, proves a healthy acceptance of the network.
The report also shows that the number of active Ethereum validators increased by 15% in the second quarter.
The expectations around Eip-1153 are for “temporary storage opcodes” to improve the efficiency of smart contracts, reduce costs and strengthen the design of Ethereum virtual machines.
According to data from the Ethereum network DefiLlama, the dominance of Ethereum is from 46% six months ago to 60 this change is especially important for decentralized exchanges (DEXs), whose market share has decreased from 46% a year ago to 60%.
Modernization of Dencun is aimed at reducing transaction costs
Another potential positive for the Ethereum network is the expected update of Uniswap, the main DEX.
According to the presentation presented on July 17 at the Ethereum community conference, the upcoming version of Uniswap v4 will use programmable buttons (hooks), built-in ETH support and singleton contracts that perform internal transactions before settling the final balance and will allow creating unlimited types of pools.
This statement raises the possibility of including Eip-1153 in the next “Dencun” update initiated by Scott Lewis, co-founder of Slingshot and DeFi Pulse.
If the implementation is approved, it will be important for the Ethereum network to regain the market share lost due to high gas prices, since the average transaction cost for seven days since February has exceeded $4. As a result, according to DefiLlama, the total value of Ethereum fell to 13.55 million ETH, which is the lowest since April 2020.
In addition, as evidenced by the 30-day data of dappradar’s unique active wallets, the activity of decentralized applications decreased: uniswap – minus 28%, 1-inch network – minus 14%, MetaMask swap – minus 8%. %, OpenSea – minus 5%.
For comparison, the activity of PancakeSwap users from BNB Smart Chain increased by 10% over the same period, and Uniswap from Polygon – by 8%.
Indicators on derivatives remain unchanged
The quarterly ethereum futures contracts signal the concern of professional traders. These fixed-month contracts are usually traded at a premium of 5% to 10% compared to spot markets, in order to compensate for the late payment, called contango.
According to Laevitas, the premium of three-month ether futures contracts is currently 4%, which is below the neutral threshold and the level of 5.5% observed on July 14. This indicator clearly indicates that traders are less likely to use leverage for “bullish” positions on ETH.
In addition, the 59% growth of ether since the beginning of the year could lead to excessive optimism on the part of investors.
A recent survey conducted by CryptoVantage among 1,000 North American residents who have invested in cryptocurrencies over the past five years revealed that 46% named ether as the main candidate for bitcoin.
This is a somewhat unexpected point of view, but which can be misleading, since the survey did not ask if a coin could finally bypass bitcoin, so the respondents do not necessarily bet heavily on such an outcome.
In its analysis, Fidelity cited good reasons for maintaining a bullish opinion on the 12-month dynamics of the ether price, but in the short term, the recurrence of high gas prices and the lack of buyer interest in leverage indicate an increased likelihood of the ether price falling below the channel support level.
