In the crypto space, the impressive price gains for Etheruem continues, as Bitcoin consolidates its massive gains. The other popular coin, the meme-inspired Dogecoin, has been slapped down after Elon Musk jokingly said it was a “hustle” at the weekend.
Doge was 10% lower on the day at the time of writing, but off its weakest point on the back of news Elon Musk said his rocket company SpaceX will now accept dogecoin as payment. This sort of bashing and pumping is quite extraordinary but dare I clearly serves the Tesla owner’s self-interest. The heightened volatility of Doge makes it popular among the trading community, but questions about its long-term success remains. For now, crypto investors seem happy to be buying every dip even if the coin has not much use.
The same can’t be said about Ethereum. Ether, the second largest cryptocurrency, started 2021 at around $700 and today it has surpassed the $4K handle to rise to a high so far of $4173. Year-to-date, ETH is now up 463%! Ethereum is in strong demand mainly because of rising institutional interest. The European Investment Bank, for example, recently used Ethereum technology to issue €100 million in two-year digital notes for the first time.
Meanwhile, a paper published by the Federal Reserve Bank of St Louis explored Ethereum’s booming decentralised finance (DeFi) sector and said if security risks are addressed, the sector may cause a “paradigm shift in the financial industry”. It is little wonder why institutions are getting excited about the technology. ETH uses blockchain not only for payments but also for storing computer code which can have many real-world applications. An ether transaction is confirmed just in seconds compared to minutes for Bitcoin. What’s more, the majority of the Initial Coin Offerings opt to get hosted on the Ethereum blockchain.
What’s next for ETH/USD?
The chart looks quite strong as it continues to hit repeated all-time highs. It has also surpassed the 261.8% Fibonacci extension target derived from the 2018 drop, at $4045. There are no obvious reference points to target, except round handles like $4200, $4300 etc. The next big psychological handle is at $5K – will it get there this week? Place your bets.
Source: ThinkMarkets and TradingView.com
On the downside, key short-term support comes in between $3980 to $4000 now, the base of today’s breakout area. Below here, $3590 to $3600 is the next area of potential support, which is where it had last found some resistance around.
ETH/USD is, quite clearly, in a very strong trend and until the charts tell us otherwise, there’s little point in trying to look for short-term bearish setups or guess where the top might come in.