What is the worst-case scenario of buying Ethereum right now?
There may be more traders shorting Ethereum at the time of writing, than accumulating. In the current bloodbath, Ethereum’s price is 11% below last week’s price level. The market capitalization has held steady at $243 Billion and the trade volume has dropped signaling an accumulation.
However, what does this mean for traders buying at the current price level? What is the worst downside? If a trader bought up multiples of ETH at the current price level and locked it in ETH2 validation, the trader would buy in multiples of 32. Among other alternatives, the most rewarding one based on current statistics would be to lock it in ETH2 validation. ETH2 validation is an alternative for traders who don’t wish to trade or invest in DeFi projects.
The post-merge annual percentage yield APY is expected to be greater than 50% and the yield is expected not to come down fast since the queue is throttled. In the worst-case traders can hedge the downside with a high yield. What’s the best case then? Based on the price chart, long-term wealth generation is the best-case scenario.
Based on the above price chart, despite the crash, ETH’s price is above the level seen in the last week of May 2021. This means the price hasn’t dipped to the lowest level in the past month. There is a possibility of a recovery in the short term since the volatility is high.
The current drop has followed the rise in social dominance and social volume. A drop in either or both is likely to signal the upcoming rally in Ethereym’s price. In this case, the traders accumulating right now would be in a position to book profits. Just as, currently, of the 42% large investors that have ETH in their wallets, over 85% are profitable.
As the price rallies, and crosses $2500, it is likely that this number closes in on 99%. This means ETH is currently undervalued, and the number of large investors who accumulated below $2200 is high. To be profitable at $2200, a trader has to have bought ETH at a price below this level.
So the real question here is, is there any foreseeable downside to buying ETH at the current price level? Based on the metrics, there isn’t one, unless the price drops below $1800 within a week, below the psychologically important level.