The popular Cryptocurrency analyst Ali Martinez expressed his bullish opinion on Ethereum (CRYPTO:ETH), citing an attractive risk-reward ratio.
The potential of Ethereum: What happened
In a post on X on Monday, Martínez declared his optimism towards the second largest cryptocurrency, highlighting its potential for a long position. He revealed his strategy, setting his stop-loss below $1,880 and targeting a price of $6,000 as take-profit.
The risk-reward ratio is a way to evaluate the possible profits of a trade against the possible losses. In a highly volatile cryptocurrency market, this ratio helps traders decide if a trade is worth pursuing.
At the time of publishing this article, Ethereum’s entry price was $2,460.54, which is an initial risk of about $600. If Martinez expects to profit at $6,000, the reward would be $3,540. The risk-reward ratio is therefore approximately 1:6.
The risk-to-reward ratio on #Ethereum $ETH is too good to pass up for a long position! I’ve set my stop below $1,880 and am aiming for a target of $6,000. pic.twitter.com/0ZjmGAjq2p
— Ali (@ali_charts) November 4, 2024
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Why is it important
Martínez’s optimism is not supported by moving average (MA) indicators, as almost all of them issue a ‘Sell’ signal for Ethereum, according to TradingView.
Furthermore, momentum indicators like the Awesome Oscillator and Moving Average Convergence/Divergence also paint a bearish chart for Ethereum.
The cryptocurrency analysis firm 10x Research highlighted in a recent video the factors that are putting pressure on Ethereum. The main one is the decrease in staking returns, which stood at just over 3.1% at the time of publication, according to Staking Rewards.
In contrast, risk-free US Treasury yields are much higher, with the 2-year yield at 4.21% and the benchmark 10-year yield at 4.31%.
Furthermore, the growing dominance of Solarium (CRYPTO:SOL), fueled by the meme coin frenzy, is taking attention and investment away from Ethereum, which used to be the platform of choice for these types of projects.
Simply put, analysts at 10x Research were skeptical about Ethereum’s long-term prospects unless there is some “significant innovation.”
Image courtesy of Shutterstock
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