Markus Thielen, IDEG’s chief investment officer, believes that Ethereum may now be plodding in a consolidation phase. After being bullish on the world’s second most popular cryptocurrency six months ago, he has now turned cautious.
Thielen’s report is based on macro factors and price analysis of Ethereum. He noted that the Fed continues to ramp up its Quantitative Tightening (QT) program and that ETH’s prices had reached the technical resistance at $1,800. IDEG highlighted that this comes as Ethereum saw a 47% drop in network revenue, a decline in total volume locked (TVL), as well as a decrease in the stablecoin market cap – USDC experienced $1.1 billion of outflow over the last week.
The expert said that Ethereum’s recent price rally has not been supported by a change in fundamentals. Thielen believes the hype around the “Ethereum Merge” is experiencing a downward trend. This shows that the cryptocurrency is set for a consolidation period prior to the upcoming Merge on September 19 and it might open up doors for more buying opportunities. He said a drop into the end of August would set up for another great entry-level. The IDEG chief investment officer shed light on the correlation between the Ethereum price and Ethereum Merge Google search results. He said it’s a good indicator of sentiment and interest which will eventually break down and become irrelevant. However, it might offer some insights into the timing of current Ethereum’s price change into the event.
Thielen said the Ethereum price will be mostly influenced by how fast the adoption rates increase. The gas fees might stay the same and the adoption curve might not rise as fast as expected. When measured in pure cashflow terms, this could make Ethereum slightly valued.