Ethereum Weathers Market Correction, ETH/USD Can Reach $10,500

A Fundstrat Global Advisors LLC strategist, David Grider, predicts the Ethereum price to reach $10,500. This is a day after the second most valuable digital asset rose to all-time highs above $1.4k, Bloomberg reported on Jan 20.

Ethereum Stands out

In a note to clients on Wednesday, David said Ethereum has the best risk/reward investment play in crypto. The strategy further added that blockchain computing might be the future of the cloud, whose risks are only limited to network upgrades and a bear market.

As per the analyst, Ethereum’s exponential price gain is due to the increasing popularity of decentralized finance applications.

These are mostly open-source dApps that ride on the censorship-resistant base layer, enabling people to access financial instruments that were previously accessible to accredited investors only.

The DeFi Effect

The democratization of finance through these applications explains the influx of capital to the sub-sector.

According to Defi Pulse, a site that tracks the performance of leading DeFi dApps in Ethereum, open-source finance applications now manage over $23 billion. Year-to-date, this value is up more than 23x.

Due to this rapid expansion, the demand for ETH, the native currency of Ethereum, remains high since it is used to pay fees.

While a direct correlation between ETH prices and the number of funds locked by DeFi dApps, on-chain transaction fees remain at record levels, negatively impacting user experience.

Transaction Fees High, but Ethereum will Survive

According to BitInfoCharts, the average transaction fees in Ethereum on Jan 19 was $8.7, a 7X increment over the last two months.

However, this is also less than $16.5, a level that network users had to pay when ETH/USD rate rose to above $1,400.

Still, regardless of the high transaction fees, Mark Cuban, the billionaire investor, expects Ethereum to survive if there is a cataclysmic fall in digital asset prices. Mark assesses that the current prices of crypto mirror those of the dot com bubble.

In a tweet endorsing ETH and BTC, he says:

“Watching the cryptos trade, it’s EXACTLY like the internet stock bubble. EXACTLY. I think BTC, ETH, and a few others will be analogous to those built during the dot-com era, survived the bubble bursting, and thrived, like AMZN, eBay, and Priceline. Many won’t.”

To counter high fees linked to DeFi, Vitalik Buterin urged projects to adopt Layer-2 solutions. As BTCManager reported, Synthetix now supports Layer-2 staking through Optimistic Rollups.

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Traders are HODLing BTC and ETH Despite The $190 Billion Plunge

Amid the panic and the subsequent sell-off of Jan 11, data from CryptoQuant shows that the steep draw-down of Jan 11 may not last as traders didn’t move their Bitcoin and ETH to exchanges.

On Jan 11, the crypto market lost a colossal $160 billion as Bitcoin prices plunged by over $10k, the worst since the flash crash of mid-March 2020. At the same time, ETH retraced from 2021 highs, sinking below $1k.

Bitcoin and Ethereum Reserves at Record Lows Despite Sell-off

ETH and BTC reserves, CryptoQuant shows, remain at record lows indicating that traders, instead of FUDing, are adamant, holding on to their gains irrespective of free-falling digital asset prices.

Ordinarily, the higher the number of coins flowing to centralized crypto exchanges could suggest pessimism in price and possible degradation in days ahead, especially when technical charts show prices are at an inflection point.

This lack of confidence often causes holders to move their coins to custodial exchanges, from their wallets, where they can swap their holdings for stablecoins or cash.

On the flip side, outflows from exchanges could suggest holders changing assessment of exchanges’ infrastructure, especially on matters security as it has been happening in the last few months coinciding with the rise of DeFi, or the confidence in digital asset prices.

Cushioning themselves against the risk of hacks, investors often move their stash to non—custodial multi-currency cold or secure hot wallets where they have full control of their private keys.

Institutional Support Soaking Miner Liquidation

Therefore, the BTC and ETH plunge without noticeable outflow to centralized exchanges points to confidence in short-term digital asset prices and the respective platform’s prospects.

This, interestingly, comes when CryptoQuant data points to miner liquidation. In the past 12 weeks, miners have been incessant, selling their coins to cover operational expenses.

Earlier, especially in the first half of 2020, their impact was massive on the thin BTC markets.

However, with demand stemming from Grayscale, CashApp, PayPal, and family offices, all of whom are facilitators allowing high net-worth investors to get crypto exposure, their impact has been low, allowing BTC and ETH prices to trend higher with added tailwinds from project-specific developments.

As per a BTCManager report, Kain Warwick, the CEO of Synthetix, speculates that Jan 11 crash maybe because of the liquidation of over-leveraged longs.

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Grayscale bought $215 million of ETH Last Month at a 128% Premium

Grayscale is ramping up its purchase of Ethereum and other cryptocurrencies, according to data from In the last month alone, the crypto manager bought over $215 million or 365,560 ETH, adding 142,475 ETH last week. Buying More ETH on behalf of Institutions Their step-up has seen the total asset under management of Grayscale rise to over

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Bitcoin (BTC) $ 41,644.16 5.44%
Ethereum (ETH) $ 2,258.40 4.22%
Litecoin (LTC) $ 74.75 3.85%
Bitcoin Cash (BCH) $ 249.57 9.43%