Ethereum may consider DAO stablecoins for the future as ETH slides

  • Ethereum considered DAO-backed stablecoins as part of its future plans.
  • ETH moved against strong buying momentum even as the selling pressure thrived.

Ethereum’s [ETH] co-founder, Vitalik Buterin, said in his December 5 blog posts that DAO stablecoins can be an integral part of the project’s future. The crypto tycoon noted that the ability of these coins to allow security makes them the most eligible.

Vitalik also mentioned that governance-backed stablecoins such as RAI may have been considered. However, its negative interest rate and vulnerability made it out of the option.

Read Ethereum price prediction 2023-2024

Choose DeFi, gain efficiency

To further defend his opinion, the founder pointed to MakerDAO [MKR] and its stablecoin, DAI, as a fitting project to lead the charge. Still, he noted that MKR had some flaws even with its innovation. He added that MKR may only be ideal in the long term unless the project improves efficiency. Vitalik said,

“Maker is a nice model for getting a stablecoin off the ground, but not a good one in the long term. Making decentralized stablecoins work long-term therefore requires innovation in decentralized governance that doesn’t have this kind of flaw.”

Further investigation showed that the FTX collapse had not helped matters of exchange deposits, especially from the Ethereum community. According to Santiment, the offer on exchanges has fallen significantly.

At press time, ETH change supply was down to 14.82 million. So this explains the idea that investors can align with Vitalik’s opinion by taking advantage of the decentralization benefits.

Source: Sentiment

Despite that, recent transactions on the Ethereum blockchain were not impressively active. This was because the gas used at the time of writing had slipped to 16.78 billion. Therefore, this was part of the reasons why ETH had struggled to remain profitable.

Skating on the lists

For ETH, CoinMarketCap knew that the 24-hour performance was a decrease of 3.08% in the last 24 hours. Based on the four-hour chart, the Relative Strength Index (RSI) was 49.65. This point meant that ETH was on a solid buying momentum.

After leaving its previous oversold situation, it ignored a fairly significant volume flowing into Ethereum. This was because the On-Balance-Volume (OBV) showed a weak signal. With OBV down to 1.757 million, it suggested that ETH had failed to overcome the selling pressure.

Ethereum price action

Source: TradingView

The Directional Movement Index (DMI), as shown above, signaled agreement with OBV’s indication of seller control. This conclusion was because the negative DMI (red) was located above the positive DMI (green).

However, with the Average Directional Index (ADX) at 28.38, it may be challenging for ETH to recover. Still, investors should not lose hope.

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