Ethereum looks to retake $2K days before London hard fork — Big breakout ahead?
The world’s second-largest cryptocurrency also surged in tandem with positively correlated Bitcoin, the flagship digital asset.
Ether (ETH) prices reclaimed $2,000 on Monday, increasing expectations that the latest rebound would served as a cue for further upside moves based on bullish fundamental and technical outlooks.
The world’s second-largest cryptocurrency (by market cap) surged up to 4.96% to $2,083 ahead of the London opening bell. Its gains appeared as a part of an overall upside correction that started late Saturday. At that time, bids for ETH/USD had fallen to as low as $1,717.41.
On Sunday, the pair closed the session at $1,984.71, following it up another spike above $2,000 on Monday, a level that traders consider backstop for further bullish momentum in the Ethereum market.
“Ethereum targets $2,045 first,” noted Twitter-based independent market analyst Research 25/7, adding that the cryptocurrency is now surfing on the “recovery wave.”
“After the dip, ETH is in consolidation and looks ready for the break higher With the only pivot in the way, the triple top around $2,045 is set as the next price target.”
Market analyst Edward “Teddy” Cleps also highlighted a bullish scenario for Ether as he referred to his custom-made “secret EMA cloud.” The analyst refers to the said exponential moving average indicator periodically to identify potential entry and exit levels in a trade.
Last week, ETH had slipped below the EMA cloud’s lowermost wave support. This week, the cryptocurrency reclaimed it, prompting Cleps to predict an extended upside momentum.
$ETH penetrating the cloud and 2000$ again – life iz gud. pic.twitter.com/1d2h1ejuw0
— NFTeddy (@TeddyCleps) June 28, 2021
Bitcoin correlation
Ether prices pushed higher also as it maintained its positive correlation with Bitcoin.
Bulls took encouragement from Bitcoin’s ability to sustain its upside bias above a closely-watched support level of $30,000. The flagship cryptocurrency climbed to an intraday high of $35,301 ahead of the London session Monday. Meanwhile, its latest move upside prompted other correlated assets to rise in tandem, including Ether.
“We’re seeing the $30,000 level on Bitcoin being defended quite well with a number of tests at that level over the past month,” Vijay Ayyar, head of Asia-Pacific at crypto exchange Luno Pte, told Bloomberg.
“We saw a lot of downward pressure on prices being defended, so this looks quite bullish at this point.”
London hard fork
More upside tailwinds in the Ethereum market came in the wake of its major protocol upgrade in July. Dubbed as London hard fork, the upgrade expects to transform Ethereum from an energy-intensive proof-work network to a speedier, “eco-friendly” proof-of-stake network.
The fork will introduce new Ethereum Improvement Protocols (EIP) that propose to make its fee structure cheaper and its blockchain more scalable to handle a higher number of transactions. The two issues have acted as bottlenecks for Ethereum’s adoption even as it remains the highest-utilized blockchain across the booming stablecoin and decentralized finance (DeFi) sector.
In general, London hard fork’s core proposal—dubbed as EIP 1559—will cap Ethereum’s gas fees while moderating the volatility of the network’s transaction fees.
The #ethereum London hard fork consists of 5 EIPs :
1.EIP-1559: Fee market change for $ETH 1.0 Chain
2.EIP-3554: Difficulty Bomb Delay to December 2021
3.EIP-3529: Reduction in Refunds
4.EIP-3541: Reject new contracts starting with the 0xEF byte
5.EIP-3198: BASEFEE opcode— Young And Investing (@QuintenFrancois) June 27, 2021
EIP 1559 also brings in the so-called ‘scarcity’ feature to the Ethereum ecosystem, which is currently the primary bullish factor in the Bitcoin markets. The cryptocurrency actively competes with the U.S. dollar to become the best hedge against inflation, thanks to its limited supply cap of 21 million units.
Unlike Bitcoin, Ethereum does not have a supply limit, making it less appealing as a store-of-value asset against unlimitedly printable fiat currencies. Ethereum’s circulating supply was 116,471,411.37 ETH at the press time.
Supply squeeze
EIP 1559 proposes to burn a portion of the fee collected from Ethereum users, thus introducing a mechanism to put active ETH tokens of supply for the first time since its launch.
Meanwhile, Ethereum’s transition from PoW to PoS means replacing miners with validators. To become a validator on the Ethereum network, a user needs to lock at least 32 ETH in the network’s official smart contracts; that also reduces ETH’s active supply. Therefore, analysts see it as a sign of another bull run providing the demand for ETH tokens increases against a decreasing supply.
“Based on the scheduled London hardfork (EIP 1559) upgrade and the proposed migration to Ethereum 2.0, investors are bound to start backing the coin the more,” Domenic Carosa, founder and chairman of Banxa, a fiat-to-crypto gateway solution, said.
“This backing will be particularly boosted as the base fee, one of the two components of the fee structure that will be ushered in by the London upgrade, will be burned. This burning effect will limit the supply of Ether and bring an end to the infinite supply crises of Ethereum.”
The Ethereum 2.0 smart contract has attracted roughly 5.93 million ETH (worth around $11.9B) to this date.
Ethereum price to $4K-$5K
Carosa added that he expects Ether to reach $4,000-5,000 by the end of December 2022 while raising alarm about the cryptocurrency’s short-term bias conflict.
We are neither bull nor bear, the executive told Cointelegraph, adding that more mature investors have started buying Ethereum near its sessional lows with a long-term holding perspective. Nevertheless, the accumulation is not aggressive enough to continue the upside run near-term.
Ether was fluctuating inside a historically relevant range defined by $2,153 as interim resistance and $1,964 as interim support. At the same time, the cryptocurrency watched its 200-day simple moving average (200-day SMA; the saffron wave) as its price floor for a potential rebound move to the upside.
That puts Ethereum en rout to $3,500 in the coming sessions, considering Wedge’s apex around $1,500 as the point of upside breakout. The pattern’s maximum height is shy of $1,800.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.
