Source: PaxForex Premium Analytics Portal, Fundamental Insight
Many dominant cryptocurrency pairs and altcoins enjoyed a Santa Clause rally, but Bitcoin and Ethereum were absent from the party. 2022 looks bright for many projects, but neither Bitcoin nor Ethereum may participate in the upcoming rally. Scalability, costs, transaction speeds, and carbon footprints will hold them back while advanced competitors will emerge from their shadows and shine. Institutional capital is rotating out of Ethereum and into projects that solve the four issues Bitcoin and Ethereum created especially scalability.
While Ethereum presently holds on to its dominance with dApp developers, 2022 is likely to see a shift towards other projects that offer superior blockchains. Layer-1 solutions continue to attract capital and users, with MATIC, Solana, and Terra leading the pack. The increase in active addresses and research, suggesting that a growing number of users have zero exposure to Bitcoin, hints towards a changing landscape. Other exciting projects consist of Algorand and Cratos, both flying under the radar of most traders, but price their explosive gains could result in price discovery in 2022.
Ethereum traders should brace for a move below $4,000 from where a gradual move lower is expected. The current usage of Ethereum remains strong, but it is wise to cash out at the top, especially with underlying fundamental factors suggesting that a growing number of enthusiasts, together with institutional capital, are leaving the party. Missing the Santa Clause rally was one of many indicators that Ethereum is slowly losing momentum, and 2022 could see this cryptocurrency struggle while others enjoy massive upside potential.
The forecast for the ETH/USD turned bearish with this cryptocurrency pair trapped inside the Ichimoku Kinko Hyo Cloud, which shows signs of rising bearish pressures. While the Tenkan-sen and the Kijun-sen both flatlined, they carry a bearish bias, and traders should monitor them for a resumption of their downtrend. The CCI accelerated out of extreme oversold territory, but bullish momentum is fading. A move below -100 is likely to follow, adding to rising bearish pressures. Will bears maintain the upper hand and force the ETH/USD into its horizontal support area? Subscribe to the PaxForex Daily Fundamental Analysis and earn over 5,000 pips per month.
Should price action for the ETH/USD breakout above 4,210, PaxForex recommends the following trade set-up:
- Timeframe: D1
- Recommendation: Short Position
- Entry Level: Short Position @ 4,065
- Take Profit Zone: 3155 – 3.315
- Stop Loss Level: 4,370
Should price action for the ETH/USD breakout above 4,210, PaxForex recommends the following trade set-up:
- Timeframe: D1
- Recommendation: Long Position
- Entry Level: Long Position @ 4,370.00
- Take Profit Zone: 4,860 – 5,000
- Stop Loss Level: 4,210
Open your PaxForex Trading Account now and add this currency pair to your forex portfolio.
