After Ethereum (ETH) prices rallied last week, the cryptocurrency may now be in a consolidation phase, says the chief investment officer of asset manager IDEG.
In a report shared with Cointelegraph on Monday, the report’s author, Markus Thielen said that while he was bullish on ETH prices six weeks ago, he has now become “cautious.”
The thesis is based on macroeconomic factors and price analysis of the cryptocurrency, noting that the Fed is still “intensifying its liquidity-draining quantitative tightening (QT) program,” while noting that ETH prices had reached technical resistance at around $1,800.
The asset manager also noted that this came as Ethereum saw a 47% drop in network revenue, a decrease in total lock volume (TVL) and also a decrease in the stablecoin’s market cap with USDC showing outflows of $1.1 billion the last week.
Speaking to Cointelegraph on Tuesday, IDEG Chief Investment Officer Markus Thielen noted that the recent price rally was not supported by a change in fundamentals.
Thielen also believes that the hype surrounding the “Ethereum Merger” is now experiencing a downward trend, as evidenced by recent Google search data.
Source: Google “Ethereum Merge” Trending Results: Google, IDEG Research.
Thielen suggested that this “Merger Fatigue” indicates that ETH is set for a period of consolidation ahead of the upcoming Merger on September 19th. But Thielen also added that this could open doors for more buying opportunities:
“Ideally, a drop in late August would set us up for another great entry-level.”
Related: Professional Investors Can Use This ‘Risk Accept’ Ethereum Options Strategy To Play Merge
Thielen also commented on the interesting correlation between the ETH price and the Ethereum Google Merge search results currently underway:
“It’s a good indicator of sentiment and interest, but eventually it will wear down and become irrelevant. However, it may offer some insight into the timing of the current Ethereum price change at the event.”
After the merger, Thielen is of the view that the ETH price will be primarily affected by how quickly adoption rates increase:
“While gas fees may remain the same, the adoption curve may not initially increase as quickly as many hope, this could make ETH slightly undervalued when measured in pure cash flow terms.”
ETH is priced right now $1,587 at the time of writing, down 6.24% in the last 24 hours.