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The second biggest cryptocurrency on the market is currently standing at the crossroads, both fundamentally and technically, as the long-awaited Merge update is already around the corner and the short-term situation on the market looks worrying.
Ethereum struggles at resistance
Despite the decreasing pressure on the cryptocurrency market, Ether still struggles to break through the consolidation channel it entered back in June. ETH has been trading in the $1,000-$1,200 range for the last few weeks, showing relatively low volatility.
As Ethereum reaches $1,210, it faces the aforementioned resistance for the third time since entering the trading range. A successful breakthrough might become a catalyst for a potential reversal rally for Ethereum, considering the potential rise in inflows after the successful Merge update.
Consolidation channels after volatile rallies are not unusual as they reflect the market's desire to "cool-off" and determine the next movement direction, especially if uncertainty prevails among investors.
Fundamental growth of the network
The Merge update is one of the most important factors that might potentially make Ethereum's mass adoption possible, as the network is expected to become more scalable and operational besides having increased security.
In addition to the aforementioned improvements, Ethereum, as an asset, will become deflationary as we expect its issuance to decrease. Unfortunately, as time has shown, investors are not yet ready to buy more coins, while knowing that its supply is continuously shrinking.
At press time, Ethereum is trading at $1,227 and actively trying to break the resistance of the upper border of the consolidation channel while showing around a 3% price increase in the last 24 hours.