Ethereum (ETH) has been on a big time run as of late, captivating the interest of investors and analysts in equal measure. During the last 30 days, ETH has increased by an astounding 44.64%. Just in the past week, it has shot up another 14%! This historic influx has raised concerns for address for so many. Are we at the beginning of a new sustained bull run, or is this just a quick bull trap rally? Li Wei, blockchain content strategist at ThrowingToken.com, explains what’s causing the recent surge to break new market heights. Hear his predictions on the chances of a long-term up cycle, plus practical tips to stay gracefully in step with today’s new normal.

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Analyzing the Technical Indicators

Technical indicators help paint an observable picture of Ethereum’s future price movements. 3 major moving averages signal ETH-USD bullish takeoff The 50 day moving average is now at 3159.26. Additionally, the 20 day moving average is currently 3747.48, the 10 day exponential moving average is 3830.54, the 5 day moving average is 3882.32 and the 200 day moving average is 2524.02. All these leading indicators point to a very solid “Buy” market. The current price is above the average price over these 10 day, 20 day, and 50 day periods, indicating strong upward price momentum.

Simply put, these moving averages act as dynamic support levels. If ETH is not able to hold above these moving averages, it could lead to a shift in the bullish trend that should continue strong. It’s crucial to understand that all of these are lagging indicators — they’re showing what already happened in price action. So, while they are important, it’s essential to look at them together with other contexts.

Technical analysis is not a crystal ball and can’t predict every market movement, so it’s important to practice it with an awareness of its limits. Li Wei advocates for traders to rely on a basket of indicators and integrate with fundamental analysis for sound decision-making.

Decoding On-Chain Data and Market Sentiment

Through the lens of on-chain data, we’re able to see what real, organic activity looks like on the Ethereum blockchain, cutting through the noise inherent to price charts. One of the most striking things that emerges in this period is the accumulation of ETH by whales. More recently, one unidentified wallet bought $143 million worth of ETH, an action signaling strong confidence from large investors. This accumulation of whales is usually a positive factor for price appreciation, as exchange supply continues to dwindle.

Market sentiment swings the trading pendulum, making it an important price-changing force. Today, Ethereum’s market sentiment is “Greed”, with a value of 74. This feeling has been consistent over the last week and month. A week ago yesterday, that score remained at 74, three weeks ago it was 71. This means that investors expect ETH to be more valuable in the future, which can create a self-fulfilling cycle of additional buying pressure.

Again, just as with the fundamentals, this is a time to be careful when the market sentiment is in extreme greed territory. Let’s be clear, we’re not saying that extreme greed is never followed by a market correction; it often is when valuations get out of hand. Staying ahead by keeping an eye on sentiment indicators and being ready for a possible pullback is always important.

Actionable Trading Strategies and Risk Management

The cryptocurrency market—fast-paced and notoriously volatile—demands a focused plan and robust risk management. Here are some trading strategies that investors can consider for Ethereum:

  • Day Trading: This involves buying and selling ETH within a single day to capitalize on short-term price fluctuations. This strategy requires close monitoring of the market and quick decision-making.
  • Swing Trading: This strategy aims to profit from short-term price patterns, assuming that prices will fluctuate within a trend. Swing traders hold positions for a few days to a few weeks.
  • Scalping: Scalping involves making numerous small trades in a short period to take advantage of minimal price movements. Scalpers typically close their positions before the end of the day.
  • Hedging Strategy: This involves balancing an existing position with an opposite position to mitigate risk. For example, if you hold ETH, you could short ETH futures to offset potential losses if the price declines.
  • Dollar-Cost Averaging (DCA): This strategy involves investing a fixed amount of money in Ethereum at regular intervals, regardless of the price. DCA helps to average out the purchase price and reduce the impact of volatility.

Risk management is equally important. Order your stop-loss. Always use a stop-loss to minimize how much you can lose on a trade. Diversify your holdings to minimize overexposure to any one asset. Never invest more than you can afford to lose and don’t trade with emotion.

Li Wei emphasizes that no trading strategy guarantees profits, and it’s essential to adapt your approach based on market conditions and your risk tolerance. We believe that staying informed, being willing to learn, and employing disciplined risk management practices will be crucial for future success in the crypto market.