Ethereum price (ETHUSD) has risen by more than 27% in August, making it a relatively successful month for the second-biggest cryptocurrency in the world. It has a market cap of about $47.7 billion, which is substantially lower than the $215 billion valuation of Bitcoin. In August, Ethereum’s 27% gain was significantly higher than Bitcoin price rise of 4% and Ripple’s decline of 4%.
Why Ethereum has been rising
Ethereum price has been rising because of three main reasons. First, the network that powers the digital currency is going through an upgrade, known as ETH 2.0. The first phase of the upgrade, known as Phase 0 has been going on this month. The goal of the upgrade is to reduce energy efficiency, increase the number of transactions, and make the system more secure. It will achieve this by transitioning from proof-of-work to proof-of-stake.
Ethereum price has also risen because of the increased popularity of the Decentralised Finance (DeFi) industry. According to DeFi Pulse, the total value locked in DeFi has increased from below $695 million in January to more than $7.83 billion. And analysts expect that the industry, which is mostly supported by Ethereum will continue to rise.
Meanwhile, low interest rates and a recent change in policy by the Federal Reserve has helped to power Ethereum price higher. And analysts expect that the policy will lead to inflated bubbles, which means that the price is likely to rise in the near term. This can be seen in the options market, where open interest of Ethereum has grown by 230% to $393 million. According to Skew, there are 535k ETH options with a strike price of $380 and below and about 243k options at $425 and higher.
Ethereum price forecast
The daily chart shows that Ethereum price has been in a strong upward trend recently. This saw the price reach a YTD high of $447 this month. It then attempted to pare back these gains and found strong resistance at $370. This sent a signal that buyers are more enthusiastic about the currency. Also, the price remains above the 50-day and 100-day exponential moving averages.
Therefore, I suspect that the ETHUSD will continue rising as bulls aim to move above the important resistance at $450. On the flip side, a move below the 23.6% resistance level at $363 will invalidate this trend.