Watch out ETH traders, despite this critical wETH update

• A recent surge in Multi-Collateral DAI repayments via wETH suggested a potential trend for Ethereum.
• Despite marginal losses, Ethereum’s current trading price and resistance zone indicated an interesting market landscape.

The value of Ethereum, mainly its wrapped variant wETH, has historically been influenced by a metric called Multi-Collateral DAI repaid. Notably, there has been a recent surge in this metric. Considering this sudden spike, what potential trajectory might Ethereum be poised to take?

Read Ethereum’s [ETH] Price Prediction 2023-24

Over 43 million DAI repaid in wETH

A recent post from Santiment suggested that Ethereum may experience a favorable trend due to recent advancements. According to the Multi-Collateral DAI Repaid chart, there was a repayment of 43.42 million coins through Wrapped Ethereum (wETH).

Previous instances of spikes in this metric corresponded to local market bottoms and tops. Upon closer examination of the chart, the latest spike occurred on 18 February and involved a repayment of over 78 million coins. Following this significant repayment, the value of wETH and ETH reached a local peak.

Source: Santiment

Understanding Ethereum and wETH

wETH, short for wrapped Ether, is an ERC-20 token created to represent Ether (ETH) on the Ethereum blockchain. It serves the purpose of allowing Ether to be utilized within smart contracts and decentralized applications (DApps) that are specifically designed to work with ERC-20 tokens. 

Additionally, by wrapping Ether, it becomes compatible with the ERC-20 standard. Each wETH token is backed by an equivalent amount of Ether held in a secure smart contract custody. Although wETH and Ether are distinct assets, they can be exchanged directly at 1:1. These tokens can be freely traded, transferred, and employed in Ethereum-based applications.

The term “Multi-Collateral DAI” refers to the expanded functionality of DAI, a stablecoin. The predecessor of DAI, SAI, was initially restricted to the Ethereum blockchain and could only accept ETH as collateral. However, with the introduction of Multi-Collateral DAI, the token became compatible with multiple smart contracts. 

This enhancement allowed various cryptocurrencies to be used as collateral for generating DAI. This broadens the range of assets that can back the stablecoin. In essence, Multi-Collateral DAI expanded the collateral options beyond ETH, making it possible to utilize different cryptocurrencies to obtain DAI.

How much are 1,10,100 ETHs worth today

Current ETH trend

Despite the anticipated impact on the price trend of ETH, the current daily timeframe didn’t indicate any significant changes. As of this writing, ETH was experiencing a marginal loss and was trading at approximately $1,790. It was worth noting that the short Moving Average had now become a resistance zone, situated around $1,890.

Source: TradingView