On Sept. 10, ITC Crypto founder and CEO Benjamin Cowen identified a wedge chart pattern this cycle similar to previous cycles in 2019 but several orders of magnitude larger.
He said that the ETH/BTC structure bottomed after an interest rate cut in 2019, and it appears to be mirroring that pattern now with an impending rate cut due next week.
The wedge that #ETH formed this cycle had higher lows that are ~10x of the 2019 wedge.
In 2019, #ETH fell back into its wedge right before the 1st rate cut, just like 2024.
After the first rate cut in 2019, ETH fell below its wedge, and then #ETH / #BTC finally bottomed. pic.twitter.com/lAcJi8TBHX
— Benjamin Cowen (@intocryptoverse) September 10, 2024
Meanwhile, MN Consultancy founder Michaël van de Poppe identified a bullish divergence which was still valid with a recent higher low on the ETH chart. This could lead to a break of the downward trend, he added.
“The downtrend of the past months is likely going to be broken upwards. That could be a significant push for the entire market.”
ETH prices are currently trading up 2.6% on the day at $2,345 at the time of writing. The asset tanked to a low of just below $2,200 on Sept. 7, which was only marginally higher than its Aug. 5 drop, suggesting that it bounced off strong support twice.
However, ETH has underperformed its big brother, dropping 46% from its 2024 high in mid-March.
Fee Woes Continue
There are several reasons why Ethereum has performed so badly, and one is the rising concern over diminishing network fees and an inflationary supply issuance.
It has been suggested that Coinbase’s support for EIP-4844 was the catalyst for the flip to inflationary issuance and the decline in fees. Meanwhile, the company’s layer-2 network, Base, has seen a ‘parasitic’ surge in users (primarily meme coin minters) and an increase in network revenue.
The Ethereum community allowed @Coinbase, a private company, to sway protocol development to favor their own for-profit business.
Now @Coinbase has parasitically stolen all of ETH’s users and fees via @base, and exports all of it onto the community as inflation. pic.twitter.com/WB58ME9vXb
— Pledditor (@Pledditor) September 9, 2024
Good New Coming Soon?
On Sept. 9, on-chain analytics platform Santiment reported that Ethereum has hit a four-month high in terms of network growth.
More than 126,000 new wallets were created in one day, which is “indicative of rising network utility,” it stated. It is the highest single day for new Ethereum wallets since May 5.
Moreover, ETH prices have ticked up 7% since the weekend as analysts speculate over a potential recovery.
Ethereum has just hit a 4-month high in network growth, on a day (Sunday) that is traditionally the least active of the week. 126,210 new wallets created is indicative of rising network utility and anticipated price bounces from the $2,200-$2,300 level. pic.twitter.com/zQaKbBdznK
— Santiment (@santimentfeed) September 9, 2024
Santiment analysts remarked on the correlation between network growth and price action, stating:
“Generally, whatever the mid-term trend is for prices, major rises in network activity are more indicative of a price reversal. This rise in network growth is more rare when prices are dropping.”