Ethereum is about to breach the psychologically significant $1000 barrier. The recent price declines are apparent, and although many investors are exiting the bitcoin market for good, the number of transactions is also declining.
This has both good and bad implications for the blockchain. The network is offloaded when interest in cryptocurrencies and NFTs declines, resulting in decreased transaction costs. On the other hand, the number of currencies destroyed each day is decreasing, while mining provides a daily supply of 11,000 ETH. After subtracting the 4,000 ETH burned, there is a net rise of 7,000 ethers.
The daily burn rate was still above 10,000 ETH towards the end of last year and the start of this year. However, the volume of transactions has reduced since the beginning of February, with ETH/USD falling to $2000 in the meantime.
Many devotees anticipated a price increase when the burning mechanism was introduced in August of last year. They were correct, as a new absolute record in the $4800 range was achieved in November. The main reason for this is not the EIP-1559 update, but rather the overall upward trend, as other cryptocurrencies also set new all-time highs.
Nonetheless, more than 2.5 million ETH might have been wasted for nearly a year, which is today worth more than 2.5 billion dollars.
This does not stop an increasing number of investors from selling their crypto assets. According to Glassnode on-chain statistics, about 200,000 ETH has been moved to exchanges in the last few days. As a result, many investors anticipate selling their coins at the end of the month. If one fails to defend the $1000 threshold, this might result in a fresh wave of sales.
Technical Price Benchmarks for Ethereum
A psychologically significant $1000 milestone is about to be tested. If the daily close falls below this level today, losses are likely to rise significantly, given it is also the last trading day of the month.
The cycle low of $883 is undoubtedly the next support, but given the technical conditions, it should be tough to defend.
If the price continues to go below this level, the space for loss towards the 123.6 percent Fibo extension of $615 expands.
The 23.6 percent Fibo retracement of $1150, on the other side, provides immediate resistance. Only if it is broken does the possibility of a rally to the 38.2 percent Fibo retracement of $1315 improve.