Why Capping Ethereum May Drive Its Price Higher

Eagle An, co-founder, and president of Bankorus stated that “By limiting the coin creation it will create clarity about its supply, which was one of the previous concerns for crypto investors. In addition, the scarcity of the coin will form a bottom line or safety margin for the token value in the long run. With these changes, the confidence level for investors will increase, and confidence is the soft yet intrinsic factor that supports token value in the long run.”

Ethereum presented a downtrend, like other popular cryptos. During March, Ethereum lost more than 50% of its value. At the beginning of March, its price was around $870 and, by the end of March, its price dropped almost to $365. Therefore, it could be inferred that something needs to be done so that to avoid a possible drop which will drive almost all the investors away.

The investor Marc Bernegger, who is also a board member of Falcon Private Bank and Crypto Finance AG, pointed out that “A hard cap could prove to be truly interesting for the future of Ether. Where the Ethereum protocol currently limits the new supply of the currency on a yearly basis and caps it by year, having a hard cap on the total supply of Ether would help increase the price of Ether, which has been declining over the past months. Even though [Buterin’s) article was satirical, there is always some truth to a joke. I would say that it could make Ether much more stable”. This means that the capping may find a probable cap on Ethereum which will balance the supply and demand. Hence, it will create a more stable instrument and give a sense of a possible range that may move.

There is a strong belief which embraces and implements the idea that the Ethereum cap will become more attractive to investors, but the sentiment of cryptos is still red. Nevertheless, if we examine the technical side, we may find potential opportunities for investing in popular cryptos.

Technical View on ETHUSD

Based on the Ichimoku system, it could be inferred that this pair shows that the sentiment appears bearish. The cloud is red. The price appears below the cloud, the Tekan Sen and Kijun Sen and, the Chikou Span seem to be below the cloud too. In the case that the price bounces on the cloud, then we may consider looking for a potential selling opportunity.

This article was written by Marios Athinodorou, TeleTrade’s market analyst, and commentator. Among others, Marios is delivering weekly trading webinars. Sign up for upcoming webinars here.