Crypto analyst Nicholas Merten says that Ethereum (ETH) is not entering a bear market despite being in a downtrend for nearly nine weeks.
In a new video, the host of DataDash tells his 492,000 YouTube subscribers that bearish sentiment centered around the leading smart contract platform is misplaced.
According to him, Ethereum’s technicals suggest ETH is only in a mid-cycle correction of an extended bull market.
“Right now what we’re seeing is probably another mid-cycle correction, just like the even heavier one we had back in May of 2021 – [a] 60% correction in 13 days. That wasn’t the bear market [and that correction] was much worse than the new correction we’re going through right now.”
Merten then says that Ethereum’s tokenomics structure which consistently burns ETH over time will take significant amounts of sell pressure off of the second-largest crypto asset by market cap, and act as a bullish catalyst.
“Ethereum, unlike Bitcoin which has a fixed supply at 21 million coins, will have the ability to be a deflationary asset, meaning that its supply will actually burn over time and decline.
Let’s just hypothetically say there’s a 100 million ETH today, and over time that would start to go down to 99 million, 98 million, 97 million, 96.5 million, it would start to go down over time so there’s going to be less in the circulating supply.
That is now possible because of two major dynamics that happened in 2021, and that has to do with the ETH2 staking contract as well as [the London upgrade].”
According to Merten, a bear market will only be evident once a euphoric, blow-off top scenario occurs, which he says is nowhere to be seen.
“With all these dynamics that are contracting supply, more and more for ETH, and with generally growing investor interest in ETH versus bearishness…how in any way can we be entering into a bear market?
We would need much greater sell-side pressure, we probably [would] need to find ourselves in a much more parabolic euphoric state where investable the punch bowl will be spilled over and the party will end, none of which we’ve seen so far.”
ETH is exchanging hands at $3,387 at time of writing, an 12.5% increase from its seven-day low of $3,011.
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