Ethereum Has Ran Out of Gas, but Should Still Manage Marginal Growth

Ethereum Has Ran Out of Gas, but Should Still Manage Marginal Growth
  • Ethereum’s high gas fees are a big disincentive, leading to loss of smart contract market share.
  • The platform’s ETF frontier is key to its growth trajectory.

Ethereum once again failed to establish a steady upward trajectory against the dollar, keeping its sideways movement to trade at $1,587 at the time of going to press. The cryptocurrency has struggled to maintain stability above the $1,600 mark in the aftermath of the market correction. ETH/USD was down 3.4% over the previous 24-hour period, and 0.5% below the price recorded sev days ago.

ETH continues to draw its momentum from institutional investments, which helped push the cryptocurrency on the ascending trajectory for most of February. The latest development is the purchase of 3,347 ETH by Grayscale Investments.  However, the past two weeks have been characterized by a slowdown in the institutional stocking of ETH.

Emerging markets

ETH prices stand to gain from an emerging affinity towards cryptocurrency ETFs. The latest move is by Evolve Funds Group. The group has filed for approval from Canadian Securities regulators to list and trade in Ether exchange-traded funds (ETF). Evolve already has $1.7 billion worth of assets under management, and the latest move by the firm will expose more investors to ETH price movements.

Diginex’s EQUUS is the latest Ethereum ETF to be launched, broadening ETH’s exposure levels in the mainstream financial markets. The Singapore-based firm announced on Thursday that the Perpetual Futures would provide investors with an opportunity to hedge against ETH/USDC fluctuations and present excellent trading opportunities hinged on ETH.

This week, Ethereum also brought on board two valuable institutional investors from the gaming industry.  Ubisoft and Sorare have launched an Ethereum-based fantasy soccer league. The move will enable players to win non-fungible tokens redeemable in ETH. The fantasy league performance is based on the Belgian soccer league and has been known to involve exchanges of millions of dollars’ worth of wins. This represents yet another niche market that could create an avenue for ETH price rise.

Ethereum was also the recipient of good news on Tuesday, following its adoption by Amazon Web Services (AWS). The news comes at a time when Ethereum faces increasing competition for the smart contract market from Cardano and Binance Coin. The integration of Ethereum into AWS, therefore, shows that the cryptocurrency’s blockchain technology is still preferred by big corporations.

Counting losses

While it still maintains its lead in smart contracts frontier, Ethereum is slowly losing its grip. The platform’s high gas charges are its main undoing and will likely see ETH seeping its recent gains. Ethereum is slowly but consistently losing its smart contract market share to its altcoin rivals, most notably Polkadot, Cardano, and Binance Coin.

In the most recent loss, SushiSwap announced on Thursday that it was diversifying its Decentralized Finance Exchange (DEX) contracts to Binance Smart Chain, xDai, Polygon, Moonbeam Network, and Fantom, with plans to incorporate Optimism in the near future. This presents a big blow to Ethereum, which had been the exclusive platform for SushiSwap’s $3 billion-a-week DEX market.  

Ethereum also failed to land the fifth-largest DEX, Balancer, which opted for rival’s Moonbeam Network. That also presents a gain of about $500 million worth of DEX transactions to a rival platform.

Technical analysis

ETH prices are still within the lag phase created by the market correction. ETH will find the first support level at $1,349 and the second support level at a much-higher $1,478 as the market attempts to stabilize above $1,600.

The first resistance level will be at $1,606, while the second one will be at $1,610. A break past the second resistance level will lead to minimal gains, reaching a high of $1,647.

ETH/USD Technical analysis
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