Ethereum Crosses $2K For First Time In 2023, Can It Keep Going?

Ethereum and the crypto market have been trending to the upside over the past week and seem poised to extend the rally. The cryptocurrency underwent a major upgrade, dubbed “Shanghai,” which enabled the un-staking of ETH locked on the “Beacon Chain,” the Proof-of-Stake (PoS) blockchain.

Unlike some expectations, the update failed to push Ethereum’s price down. As of this writing, the cryptocurrency recorded an 8-month high, climbing north of $2,000 for the first time in 2023 and potentially reaching its next resistance area.

Ethereum Price Will Run Higher Or Slow Down? Traders’ Disbelief Could Fuel The Rally

Recent data from research firm Santiment hints at a potential drop for Ethereum. The cryptocurrency has been on a bull run since the start of 2023, and now it’s hinting at signs of a potential drop.

The research firm looked at ETH’s 30-day Market Value To Realized Value (MVRV) which stands at 9.95% after the update, as seen in the chart below. This indicator enters a danger zone when it reaches around 15% or above.

In other words, Ethereum could still record some profits in the short term. Despite this possibility, Santiment warned:

(…) this MVRV being well over 0 does indicate a higher risk of a drop. But it is not quite at the level where we should be extremely concerned. On the long-term side, the 365-day MVRV is +29%, which is the highest it has been since December 27, 2021. This is a larger concern, with traders really showing heavy profits and not a lot of pain that is typically needed for prices to rise.

Another positive sign for ETH in the short term is the funding rates in the derivatives sector. Santiment looked at Deribit, a futures and options trading platform, and discovered negative funding rates, which points to traders having little confidence in the current rally.

The chart below shows that ETH’s price correlates negatively with its funding rate. In other words, if the funding rate is negative like now, meaning traders are shorting the crypto, the price trends upwards. The research firm noted:

As of now, we are actually seeing quite a bit of disbelief. Shorting is quite prevalent, and this ultimately is a good sign that there could be more liquidations to add a bit more rocket fuel for prices to rise.

ETH’s Price In The Long Run

NewsBTC has been covering the analysis, speculations, and market expectations around Shanghai. While the event technically allows ETH holders to inject liquidity into the market, most of these individuals are holding the cryptocurrency at a loss.

Thus, ETH holders have little incentive to dump their coins for now. In addition, as the CEO of Ether Capital, Brian Mosoff, told us in an exclusive interview, the people staking Ethereum are not speculators but bullish long-term holders.

On the possibility that Shanghai was going to lead ETH back to support, Mosoff said the following, emphasizing its long-term bullish case:

I think that this is just noise that will go away, even if there is some short-term selling. I think very quickly the price would rebound because people are seeing the opportunity around a best-in-class smart contract platform and the ability to generate yield. That’s a very strong value proposition (…).