Ethereum price is bouncing back today after going through a sharp reversal yesterday when it dropped by 17%. Today, the ETH/USD pair is trading at 1,170, which is relatively higher than the overnight low of $1,062.
The background: Yesterday was a mixed day for digital currencies, including Ethereum. On a positive side, Bitcoin price managed to cross the important level of $40,000 for the first time on record.
Other currencies also rallied, pushing the market cap of the industry to more than $1 trillion. On the negative side, they all suffered a sharp decline, with Bitcoin falling to below $38,000. This happened as more investors started taking profit after the sharp rally. Indeed, in most cases, the price usually goes through a major reversal after reaching a vital level of resistance.
What next for Ethereum price today: In my view, there is still demand for digital currencies eve after their sharp rally in recent months. For one, with the Democrats now in control of congress, we will likely see more stimulus.
They have already supported a $2,000 check, infrastructure spending, and more money to states. Some of these funds will go to digital currencies, where Ethereum will be a big beneficiary.
Ethereum price technical analysis
Turning to the hourly chart, we see that the Ethereum price has been crawling back after dropping sharply yesterday. Before the drop, we see that ETH was forming an ascending channel pattern that is shown in black.
Therefore, the current rally is mostly because investors want to go back to the channel. As such, the price will likely bounce back today as bulls aim for the lower side of the channel at $1,240. However, a drop below the lowest level yesterday will mean that there are still sellers in the market.