Ether's Value Surge: Impact of Bitcoin Capital Rotation and Return of Whales
Summary:
Ether's (ETH) value saw an increase of 4.25% on April 21, echoing a broader 3.5% growth in the total cryptocurrency market capitalization. This increase appears largely driven by capital transfer from Bitcoin traders after the fourth Bitcoin halving event, forming a pattern seen during previous halvings. Additionally, increased engagement from Ether's wealthiest investors, known as whales, signals a potential rise in Ether's price. Technical analysis also suggests a purchasing trend among traders, where Ether's lower trend line is seen as a prime point for investing.
Ether (ETH), one of the premier cryptocurrencies on the market, saw an increase of 4.25% in value on April 21, its value now around $3,200. This leap echoes a similar trend in the entire cryptocurrency market, a 3.5% growth in the total market capitalization within the same period.
The reasons behind Ether's exemplary performance over other cryptocurrencies are worth examining. One main factor is the transfer of capital from the Bitcoin market into Ether. Specifically, today's ETH gains in comparison to the U.S. dollar are driven by significant investment influx from the Bitcoin (BTC) market.
Concrete evidence of this is seen in how the pair ETH/BTC grew by approximately 2.5% in the last 24 hours, reaching 0.048 BTC as of April 21. Concurrently, the Ethereum Dominance Index (ETH.D), an indicator of Ether's market power versus all other crypto markets, rose over 1% within the same timeframe.
Ether's rising trend began on April 19 and notably coincided with Bitcoin's fourth halving. Post this event, both the ETH/BTC ratio and ETH.D increased by about 3% and 0.75% respectively. Similar trends were observed following previous Bitcoin halving events – the second and third in July 2016 and May 2020 respectively – with capital being shifted from the Bitcoin market into Ethereum.
This comes as investors typically either let go of their Bitcoin holdings or reduce their demand following its halving, since any expected increase in price leading up to the event would have been accounted for in the market. This switch of focus opens avenues like Ether for fresh investment and growth in the cryptocurrency market.
In tandem with this monetary shift, Ether has seen increased accumulation among its most affluent investors, a.k.a, whales. Data from Glassnode demonstrates that over the past two weeks, the Ether supply held by addresses with a balance between 1,000 -10,000 and 10,000 -100,000 ETH has seen a rise. This usually acts as a leading indicator hinting at a future increase in price, explaining the current gains seen by Ether.
Lastly, technical analysis signifies that Ether's gain today is also due to the lower trendline of its current descending channel pattern operating as a support point. This exact level also happens to be near Ether's 0.5 Fibonacci retracement line at about $2,820 and its 200-day exponential moving average (200-day EMA; the blue wave) at nearly $2,725, indicating that traders consider this a prime point for buying Ether.
Published At
4/21/2024 3:15:31 PM
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