Ethereum price has broken out, as we predicted a few days ago. The digital currency is up by more than 0.10% and is trading at $415, which is its highest level since September.
The current rally is attributed to three main reasons. First, this week, PayPal, the biggest fintech company in the world embraced digital currencies. The company announced that it will start allowing Bitcoin transactions. Although the company did not exclusively mention Ethereum, analysts believe that it will be next because of its role as the second-biggest digital currency in the world. According to Bloomberg, the company is considering buying BitGo, a leading digital asset custody company.
Second, Ethereum price is rising because of the overall weaker US dollar. The dollar index has been falling, and yesterday, it fell to its lowest level since September. The decline is mostly because other currencies like the euro and pound have been rising as the dollar appetite wanes. As I have written before, the greenback usually has an inverse relationship with cryptocurrencies and other dollar-based assets.
Third, as I have written before, the market has started embracing decentralised finance (DeFi). Indeed, the total value locked in the DeFi industry has recently soared to more than $11 billion. This matters to ETH because most DeFi projects are usually based on the Ethereum protocol. As the ETH 2.0 upgrade goes on, analysts believe that activity in ETH will continue rising. Indeed, according to a new study by Messari, Ethereum blockchain is processing more transactions than Bitcoin blockchain based on the popularity of DeFi.
Ethereum price technical analysis
The daily chart shows that Ethereum price moved below the 38.2% Fibonacci retracement level in March. Since then, it has risen and crossed the 23.6% retracement level. It is also being supported by the 25-day and 50-day exponential moving averages and the psychological-level of $400.
This means that bulls have now taken over, which implies that they will try to retest this year’s high, which is close to $500. On the flip side, a move below $400 will invalidate this trend.
Don’t miss a beat! Follow us on Telegram and Twitter.
Dow Jones Daily Chart
More content
- Download our latest quarterly market outlook for our longer-term trade ideas.
- Follow Crispus on Twitter.
- Do you enjoy reading our updates? Become a member today and access all restricted content. It is free to join.