Ethereum gaining momentum, but is the correction over yet?
|Ethereum (ETH) has been posting impressive gains recently, with it jumping 24.9 per cent to go from $2,618 on 3 February to around $3,270 as of today, according to CoinMarketCap data.
The broader cryptocurrency market, including the likes of Bitcoin (BTC) and Solana (SOL), has also been experiencing similar rallies following the large dip we saw last month.
Specifically, Bitcoin is up around 22.8 per cent over the last seven days but still needs to see gains of roughly another 50 per cent to hit the all-time high it set in November.
What’s next for Ethereum?
Cryptographer and crypto analyst Dr Raullen Chai spoke to FXStreet on Thursday about what key levels investors need to keep an eye on for Ethereum and what could be in store for the world’s second-largest cryptocurrency by market cap.
Dr Chai, co-founder and CEO of IoTeX, noted that a number of indicators are spelling out a bullish picture for Ethereum following it breaching the $3,000 level over the weekend, but he stressed that some indicators are signalling a loss of momentum.
“There’s been a noticeable drop in ETH trading volume as it has been rallying in recent days. While this in itself shouldn’t be a major concern for investors or traders, it arguably indicates that Ethereum is weak and could be vulnerable in the event of a broader market pullback,” he said.
“Furthermore, with the RSI exceeding 60, it is pretty close to being in ‘overbought’ territory, which suggests consolidation could be on the way before a continuation of the rally.
“In a similar vein, while the daily MACD (moving average convergence divergence) remains bullish, the histogram shows a tapering of momentum which indicates Ethereum could start to encounter more resistance and potentially go through a period of consolidation.”
Continuing, Dr Chai noted that $3,400 is a key resistance level and should this be breached, Ethereum can then target the $3,750 level and potentially the $4,000 level over the remainder of February.
What’s been driving Ethereum’s gains?
Ethereum’s recent gains have come as the wider crypto market has rallied, partly due to investors buying the dip to take advantage of the low prices.
Russia’s announcement on Wednesday that it will be regulating crypto rather than banning it is the latest positive catalyst for Ethereum and other coins and tokens, as it could pave the way for more crypto adoption in the country.
Interest rates should continue to be closely monitored over the coming weeks and months, as a hike – particularly by the Federal Reserve – would spell bad news for cryptocurrencies and other assets, such as stocks.
On the other hand, the crypto market could rally if the Fed decides to keep rates low or increase them more gradually than investors and analysts are expecting.
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