Ethereum’s Long-Term Outlook Remains Positive Despite Market Volatility

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Why It’s Worth Holding Ethereum Long-Term

Ethereum (ETH) is one of the most well-known cryptocurrencies alongside Bitcoin (BTC) and has garnered significant attention in recent years. But is it a good idea to hold Ethereum long-term? Let’s take a closer look.

Optimism Despite Volatility

Despite recent volatility in the crypto market, the sentiment for Ethereum remains optimistic long-term. The NUPL value (Net Unrealized Profit/Loss), which defines the difference between the relative unrealized profit and the relative unrealized loss, has risen over the past two months. This indicates that despite recent price fluctuations, where ETH has dropped to the support level of $2.2k, investors remain optimistic.

Understanding the Sentiment Behind Ethereum

The NUPL reached a value of 0.385 on January 11th. The last time ETH’s NUPL was higher was in May 2022, according to data from Glassnode. The unrealized profit or loss is calculated by weighting each circulating ETH by the difference between its current price and its realized price. The realized price refers to the price of ETH when it was last moved. The difference between these two values has proven useful in the past for assessing the market cycle of Bitcoin and Ethereum.

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Short-Term Sentiment

A look at short-term sentiment, however, shows the opposite. The weighted sentiment data from Santiment was near zero, suggesting social media did not favour either the bears or the bulls. Open interest dropped sharply on the 22nd and 23rd of January, in parallel with Ethereum’s price. The conclusion was that participants in the futures markets preferred to hold back while ETH was trading in its $2.2k support zone.

ETF Approval Surprises Many Participants

After January 11th, ETH has shown a downtrend on the lower timeframe price charts (like the 1-hour chart). Yet from the 12th to the 22nd of January, the estimated leverage ratio increased. However, it dropped quickly from the 22nd to the 24th of January as prices crashed. This suggests that, although a good portion of speculators preferred to hold back (open interest was slowly dropping at this time), a large number also tried to increase their leverage, hoping to catch an upward breakout.

Recovery or Rejection?

Whether Ethereum will experience a rejection or recover bullishly remains to be seen. What is clear, however, is that holding Ethereum long-term could be a good idea, especially given the ongoing optimism despite recent volatility. Therefore, it may be worth keeping an eye on Ethereum and potentially incorporating it into your long-term investment strategy.

Sources: Glassnode, Santiment, CryptoQuant, Hyblock

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