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Ethereum Price Preview October 19 – October 25

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Welcome to the Ethereum Price Preview, an analysis of current and upcoming market events and how they might shape the price of ETH and the trajectory of the network.

Last week saw a potential stalemate emerging among BTC traders, rising tokenization of Bitcoin on Ethereum and increased network congestion. In this piece, we take a look at the various factors that may be impacting Ethereum price for the week ahead.

WBTC Sees Further Growth, Coinbase Pro Adds Support

The total value locked in DeFi now stands at $11.2 billion, with Wrapped Bitcoin (WBTC) at #3 in the rankings below Maker (#2) and Uniswap (#1). The increased use of WBTC and other tokenized Bitcoin projects on Ethereum strengthens the use case for Ethereum in the eyes of many analysts.

Source: DeFi Pulse

Industry-leading crypto exchange Coinbase Pro is now adding WBTC support, with trading opening tomorrow on October 20. Traders can deposit WBTC to the exchange from Monday October 19 onwards. The listing on the world’s second-largest exchange by volume is a major vote of confidence in the longevity of WBTC, indicating that the Coinbase Pro team expects WBTC to remain a major project for the foreseeable future.

In a press release, the Coinbase Pro team stated “WBTC was created to allow Bitcoin holders to participate in decentralized finance (DeFi) apps that are popular on Ethereum,” adding that  “the BTC that backs WBTC is transparently verifiable through a “proof of reserve” system that verifies the 1:1 backing between minted WBTC tokens and Bitcoin stored by custodians.”

Trading will be available in all Coinbase-supported states and regions with the exception of New York, which is off-limits due to regulatory restrictions. Ethereum also gained mainstream media attention over the course of the week, with CFTC chairman Heath Tarbert voicing his support and admiration for the project.

Tarbert was referring to the growth in DeFi as well as the Ethereum network in general when making his comments.

ETH Eyes $400 Pending Test of Key Indicator

ETH continues to trade in the high-$300 range, currently fluctuating around $380. The 50-day Simple Moving Average (SMA) remains above the price at the moment, likely limiting price movement. The 100-day SMA may be a key price indicator at the moment, and FX analysts point out that since September, the 100-day SMA has resulted in bullish reversals each time it was tested. If Ethereum holds at current levels, a breakout to $400 may be imminent.

1.2 million addresses bought 5.6 million ETH in the $369 – $380 range recently, indicating strong resistance ahead. Resistance appears to be stronger than resistance based on recent price action, making the test at the 100-day SMA all the more crucial. Breaking through this indicator could be the beginning of a near-to-mid-term bearish reversal for ETH price action, with analysts marking the bottom as low as $340.

ETH 2 Medalla Testnet Suffering From Low Activity

The Medalla testnet has reportedly seen many of the validators pull out, possibly joining the Zinken testnet or simply leaving the project altogether. ETH 2 developer Yorick Downe stated that the testnet has “entered non-finality. This means we don’t have enough validators online to agree to what the state of the network is,” adding that “some sync bugs reared their heads in Prysm and Nimbus. We lost more validators to the bugs, not everyone has updated since.”

Downe stated that validators will either return to the network, or lose their testnet ETH until finality is regained, although clarified that in a real main net event, this would likely not happen as validators would be losing real funds.

The report indicates that ETH 2 remains in limbo, with more problems to overcome before launch. However, ETH 2 builder Benjamin Edgington indicated that ETH 2 beacon chain launch could still be as little as 6-8 weeks away based on current performance.

The success and timeliness of the launch will likely have a major impact on ETH price as well as the health of the network in general, with scaling solutions in ever-increasing demand as the network grows. Gas prices did fall significantly in recent days, dropping approximately 40% over the weekend.

Media Roundup

Dystopia Labs is hosting the ZKP & Privacy Summit on Monday October 19. The event is organized by Zcash, Secret Network, Z Coin, and Blockchain Acceleration Foundation among other projects. 

The free, online event is marketed towards developers as a way to foster discussion around the “latest research & innovations around zero-knowledge proofs, financial privacy, and more.” Monero co-founder Riccardo “Fluffypony” Spagni will be in attendance, along with representatives from 01 Labs, ethSTARK, Zcash, and projects.

Also on October 19, Ethereum Sao Paulo is hosting a meetup based around interoperability between Ethereum and Bitcoin. The Portuguese language event has dozens of registered attendants who will discuss tokenized Bitcoin as well as the compatibility of smart contracts written in Solidity on RSK.
Blockchain Dev Asia is also hosting a small meetup on October 22 to share general news and insights on blockchain development, with all welcome.

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Conor Maloney
Conor Maloney Analyst