Ethereum’s rally against the U.S. dollar continued last week with the second-largest coin by market cap almost hitting the $500 level. Unfortunately, the greenback has caught a bid and is dragging down the commodity rally.
The rally in Ethereum also saw the coin reach its highest level against Bitcoin since January 2019 and this is highlighting the growing importance of the coin in the cryptocurrency space amidst the rise of Decentralized Finance (DeFi) projects in the last year. DeFi is seeing a boom in solutions for blockchain-based lending and other traditional finance offerings, with the majority of them having their native tokens operating on the ethereum blockchain. This is leading to strong demand for Ethereum and a rise in its price and volumes.
Another upcoming development for ethereum is the arrival of the long-awaited ETH 2.0 upgrade which is in development and expected to go live this year. The upgrade is expected to increase speed in ETH transactions and also go a long way to solve the problem of scalability, which is an obstacles for the blockchain industry.
The scalability issue is more important than ever for ethereum with the rise of DeFi projects, which is congesting the network and driving up eth “gas” prices. This would lead to DeFi projects having to shift blockchains if the cost to transact made their projects less financially viable. Until cryptocurrencies see more institutional investment, Ethereum could continue to gain ground against Bitcoin.
ETHUSD Technical Outlook
ETHUSD rallied from support last week and make a big push for the $500 level. The drop yesterday has engulfed the previous day and this is usually a bearish signal, although less so in a bull trend. Support for ETH would come in at the uptrend line around $400 ahead of the horizontal support at $365, which capped the 2019 rally. The Investing Cube Trading Course can help if you would like to learn more technical patterns, or the team is also available for one-to-one coaching.
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ETHUSD Daily Chart
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