Ethereum: a major mistake that won’t dictate your short-term trend

Ethereum is the king of altcoins and there is no doubt about that. Over the past week, certain on-chain metrics have moved in your favor, and in the long run, your pricing credentials promise higher returns. However, it is currently surrounded by an air of invincibility, which suggests that ETH could also avoid any short-term correction.

However, that is unlikely to be true. In this article, we will take an in-depth look at the bidding of the major directions and how bearish deviations can be created regardless of bid swings.

Lower bid on exchanges does not mean less chance of correction

According to Santiment, the ETH the supply maintained in the exchanges has been reduced to 15%. Last year, during the same period, the figure was around 23%. The amount of ETH moving towards smart contracts, DeFi protocols, cold wallets and share directions can be seen to improve market stability and decrease selling pressure.

Now, technically, that makes a lot of sense, as a lower liquid market supply would mean that demand will increase organically. However, it doesn’t really eliminate bearish concerns in the short term.

How is that? Well, because the supply held in the chain is still high enough to create a divergence on the charts.

Source: Glassnode

According to Glassnode, the percentage of ETH supply in the hands of the top 1% addresses is close to 96%. It has not dropped below 95% since February 2018 and indicates that a few thousand addresses contain a significant amount of Ether. Now, it’s important to note that these addresses can belong to multiple people, entities, or funds.

A particular address does not constitute a single person. However, the fact that some of the directions can drive a price change is also true. It is possible for a group of investors to make huge profits, and a collective decision to make returns can still move the market.

Does the decentralized nature of Ethereum affect? Technically, no.

Source: Glassnode

Ethereum’s Herfindahl Index has held lower levels since early January 2016. A lower Herfindahl Index suggests that ETH is more evenly distributed between addresses. Exchange addresses, smart contract addresses, and other special asset-specific addresses (for example, team fund addresses) are excluded.

Stay on topic

The crux of the story remains the same. In the short term, the low supply of Ethereum on exchanges does not eliminate the chances of correction, as the reversal of the market structure and profit taking are an integral part of a volatile market.

It is absolutely necessary to invest in the market according to the risk adjustment, as no digital asset is resistant to market settlements.

This is a machine translation of our English version.

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