Favorable Market Sentiments and Upcoming Upgrades Propel Ethereum's Ether to a Notable Surge
Summary:
Ethereum's Ether (ETH) experienced a significant weekly surge, rising about 12% and reaching a value of $2,540. This increase paralleled wider cryptocurrency trends, particularly those influenced by Bitcoin. Factors contributing to Ether's price uptick include a bullish market sentiment shaped by two key events - the approval of Bitcoin ETFs and Federal Reserve Chairman Jerome Powell hinting at possible interest rate cuts. Other influencing factors include Ethereum's imminent Dencun upgrade which is expected to improve network efficiency, Ethereum's staking milestone that indicates trader confidence, and growing anticipation over potential spot Ethereum ETF approvals. However, a bearish reversal is possible near horizontal resistance levels.
This week saw Ethereum's Ether (ETH), its native digital currency, making noteworthy advances, gaining about 12% overall, including a 1.5% daily surge. With this rising trend, Ether's value reached a high of $2,540, not seen since Jan. 19. A myriad of factors such as technical changes, market mood, and macroeconomic signals influence Ethereum's price dynamics. Let's explore the upswing in Ether's price over the past few days.
Optimistic market atmosphere
The uptick in Ether's performance is in sync with the wider world of cryptocurrencies. Bitcoin, for instance, which constitutes a significant portion (over 50%) of the total crypto market value, has expanded more than 15% on a weekly basis to about $48,600.
Enthusiastic crypto traders attribute their bullish sentiment to two primary reasons. Firstly, the recently certified Bitcoin ETFs have drawn $10 billion in funds within a month, indicating mounting corporate interest in crypto investments.
Secondly, traders' risk attitude has significantly brightened post Federal Reserve Chairman Jerome Powell's 60 Minutes interview. During the interaction, Powell hinted at potentially reducing interest rates later in the year, injecting fresh optimism into the cryptocurrency world.
It is common for Ether and other highly-valued cryptocurrencies to mirror Bitcoin's trading patterns. As of Feb. 11, the daily association coefficient between ETH and BTC stood at 0.96, underlining Ether's rise due to Bitcoin's climbing wave.
Dencun upgrade
Ethereum is poised for several major technical enhancements, particularly the forthcoming Dencun update. Slated for March 13, this update seeks to enhance network functionality and Layer-2 support, introducing essential scalability upgrades.
Preceding key network upgrades, Ether prices have historically registered positive responses. For instance, the crypto escalated 100% prior to September 2022's Merge upgrade and similarly, it soared approximately 95% before the London Hard Fork in August 2021.
These enhancements usually incorporate scalability and safety upgrades, rendering Ethereum more appealing to developers and consumers. This likely stirs speculative interest as market participants anticipate a surge in ETH adoption and demand.
Ethereum staking landmark
Recently, Ethereum achieved an impressive milestone with quarter of the circulating supply now staked. In theory, this accomplishment demonstrates increasing trader confidence in Ethereum's long-term future.
Staking involves earmarking Ether in the network to back up operations and secure the blockchain, thereby effectively reducing the amount of Ether accessible for trading. Therefore, if the demand for Ether continues to surge against the backdrop of a shrinking supply, the price stands to benefit positively.
Ethereum ETF anticipation
Also contributing to Ethereum's price traction today is the growing excitement over the likely approval of Ethereum's spot ETF applications.
For instance, in January, Standard Chartered forecasted that the U.S. Securities and Exchange Commission (SEC) will probably authorize all pending spot Ethereum ETF applications – those by BlackRock, Ark Invest, and Fidelity – by May 2024.
Moreover, the firm expects this approval to skyrocket ETH's price to around $4,000, if it follows Bitcoin's path during its ETF approval process.
ETH price technical rebound
Representing a broader recovery that started on Jan. 25, Ether's recent price surge followed its touch on support confluence, which encompasses the lower limit of an ongoing ascending broadening wedge pattern and ETH's 0.382 Fibonacci retracement line at around $2,270.
As of Feb. 11, ETH's price aims to reach the 0.0 Fib retracement line at roughly $2,720. Given its daily relative strength index (RSI) is 65.60 – it's still not in overbought territory (over 70), this appears to be feasible.
The bearish scenario
On the flip side, the bears will attempt to pull ETH/USD away from its existing descending trendline resistance. This could possibly lead to a drop towards the lower border of the ascending broadening wedge pattern, aimed at the 50-day exponential moving average (50-day EMA; red wave) located near $2,340.
The prospect for a bearish reversal also comes into play near the approximately $2,620 horizontal resistance level, indicating a potential decrease towards the 0.236 Fib line at roughly $2,440.
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Published At
2/11/2024 3:19:40 PM
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