Ethereum's Ether Records 4.5% Surge, Aims for $4,000 Breakout Amid Reduced Supply and Whale Accumulation
Summary:
Ethereum's Ether (ETH) has experienced a 4.5% rise in value over 24 hours, reaching $3,500 on March 25. This rebound coincides with accumulation among Ethereum's wealthiest investors or "whales," and a reduction in the circulating supply of ETH. Factors pivotal to this trend include entities holding between 1,000 and 10,000 ETH expanding their holdings and a decrease in circulating supply due to Ether locked in smart contracts. Additionally, anticipation of interest rate cuts by the Federal Reserve could make riskier assets like cryptocurrencies more appealing, further bolstering Ether's value. Now, Ether targets a $4,000 breakout by April.
The value of Ethereum's Ether (ETH) has experienced a rise of about 4.5% in the past 24 hours, reaching $3,500 on March 25. This surge is part of a broader revival trend, as Ether has seen an increase of nearly 14.5% from its recent minimum value of approximately $3,050 on March 20.
Now, let's explore the factors that have stimulated the recent increase in the price of Ether.
Resurgence of Ethereum Whales
The recent upswing in Ether's worth was preceded by a gathering period among its wealthiest investors, commonly known as whales. Entities holding between 1,000 to 10,000 ETH expanded their Ether holdings by around 1.15% in March, as per Glassnode's data. This pattern of accumulation has been previously linked with significant upward price movements.
These accumulation periods have harmonized with price drops, alluding to the fact that large-scale investors are currently purchasing during market lows, in anticipation of a price rise.
ETH Supply Reduction
Two significant on-chain metrics point to a reduction in the circulating supply of ETH, heavily influencing the surge in Ethereum's price. The portion of Ether supply secured in its smart contracts has shot up to 36.47%, achieving record levels since March 5.
This locking mechanism decreases the circulating supply available for trading, possibly creating upward pressure on the price. Furthermore, there has been a clear decrease in circulating supply over just one week, evidenced by a net change of around -4,000 ETH as of March 25, which could promote a price hike.
Alongside, the decline in ETH reserves across all crypto exchanges since March 20 matches Ether's recovery. This illustrates a rising trend among investors to retain ETH for more extended periods, as opposed to exchanging it for other assets.
Anticipation of Rate Cuts
Ethereum’s price has been growing alongside similar resurgence throughout the cryptocurrency market, following speculations that the Federal Reserve, along with other major central banks, likely will start reducing interest rates by June.
Lower interest rates often make government bonds less appealing, which are typically perceived as one of the safest investments. Consequently, investors start redirecting their capital towards riskier assets, like stocks and cryptocurrencies, in search of higher returns.
The Federal reserve hasn't increased the interest rates since July, 2023. Since then, Ether's price has shot up by over 108%. In the same time frame, the entire crypto market has surged 114%, strengthened by the approval of spot Bitcoin exchange-traded funds (ETFs) in the U.S.
Rebound of ETH Price Technically
Ether's price began to recover after hitting a support confluence involving its 50-day exponential moving average (50-day EMA), standing at $3,270 and its 0.382 Fibonacci retracement line, approximately at $3,125.
At the time of Ether's turnaround, its RSI hovered around 50, signalling neutral market sentiment. Intriguingly, this trend mirrors ETH's bounce in January 2024, which was followed by a 90% price surge to roughly $4,085.
Presently, Ether is aiming for a breakout to $4,000 by April if it can close decisively above its 0.236 Fibonacci line, around $3,500. However, if this remains unattainable, it could lead to a sharp plunge towards the support confluence region.
This piece does not contain any investment advice or recommendations. Any investment or trading move involves risks, and readers should do their independent research before making a decision.
Published At
3/25/2024 3:01:19 PM
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