Ethereum Ether's native token (ETH) has sunk by more than 20% after setting its all-time high at around $ 4,867 on Nov 10, 2021. However, the sharp price retracement does not mean that ETH cannot chase a new record in the coming months, as various technical, macroeconomic and trading factors Tracked broadly -suggest chain indicators.
One of these indicators foresees Ether price reaches $ 5,000 in the first quarter of 2022, while others seem poised to support the bullish bias.
ETH Price Paint Falling Wedge
Ether's recent price correction is painting a potential classic bullish reversal pattern known as a "falling wedge."
In detail, falling wedges start wide at the top but contract as the price goes down. As a result, price action forms a conical shape that tends to decline as the highs and lows of the reaction converge. Traders become aware of a bullish bias only after the price decisively breaks above the resistance of the wedge.
As a result, expectations remain high that ETH price would break above its falling wedge resistance in the next sessions. Doing so would increase as much as the maximum distance between the upper and lower trend line of the wedge when measured from the breakout point.
Literally unchanged ...$ ETH goes to $ 5k pic.twitter.com/11mAQiJxJS
- Kong Trading (@KongBTC) January 4, 2022
That roughly puts the price target for Ether at $ 5,000.
ETH deposits to exchanges fall
Traders generally move their tokens to exchanges when they intend to sell / exchange them for fiat money, stablecoins, or other cryptocurrencies.
In general, a higher number of transactions made on crypto trading platforms reflects a high selling sentiment in the market. Conversely, if token transactions plummet, they show strong market holding sentiment.
Data collected by blockchain analytics service Glassnode shows that the number of Ether on-chain deposits for exchanges it fell to its 23-month low on January 3.
Additionally, another Glassnode metric that tracks the number of Ether addresses sending ETH to exchanges also reported declines over the past 30 days, the same period in which the ETH / USD rate fell nearly 11%.
Meanwhile, the total Ether balance across all exchanges has been in a downtrend since August 2020, suggesting that ETH investors are in it for the long term since its price rose from almost $ 400 to just over $ 3,800 in the same period.
Cheap money here to stay?
Ether's fall of over $ 1,000 from November 2021 to date came primarily in the wake of the aggressive swing by the Federal Reserve.
The central bank of the United States. decided to accelerate the rollback of its $ 120 billion-a-month asset purchase program, followed by three rate hikes in 2022 from near zero levels, to halt rising inflation. Its loose monetary policy was one of the main catalysts behind similar price rallies in Ethereum, Bitcoin (BTC) and other crypto markets.
But the Fed's efforts to tame inflation from its current level of 6.8% with three rate hikes it may not affect Bitcoin and Ethereum prices in the long term. For example, Antoni Trenchev, managing partner at crypto lender Nexo, believes cheap money is here to stay.
"The number one influencer for Bitcoin and cryptocurrencies in 2022 is central bank policy," he told Bloomberg.
โCheap money is here to stay, which has huge implications for cryptocurrencies. The Fed does not have the stomach or the backbone to endure a 10% -20% collapse in the stock market, coupled with an adverse reaction in the bond market. "
Hungarian-born billionaire Thomas Peterffy Also he said that investors should allocate at least 2-3% of their net portfolio to cryptocurrencies like BTC and ETH in case fiat money "goes to hell."
Related: More billionaires turn to crypto for fear of fiat inflation
Additionally, the founder of Bridgewater Associates Ray Dalio revealed that it has kept BTC and ETH in its portfolio against the risks of cash devaluation brought on by higher inflation.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and business move involves risk, you should do your own research when making a decision.
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