Ethereum (ETH) Preparing for a Bitcoin-Like Breakout Above Its All-Time High

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The world’s second-largest cryptocurrency Ethereum (ETH) has been testing investors’ patience for quite a while! After hitting its new all-time high above $1450, ETH has been largely consolidating between $1350-$1400 levels.

Interestingly, this consolidation can lead to a major breakout above the all-time high very soon. The ETH graph at this stage exactly resembles BTC price movement below $20,000 levels in December 2020. Well, it suggests that ETH is poised for a solid breakout and possibly we can see ETH price literally doubling from the current levels.

#Bitcoin struggled to break the 20K ATH for 3 weeks, then doubled in price in a brief period. Doesn’t #Ethereum look similar? If so, we should expect fireworks next week. 🤩🚀 pic.twitter.com/lIMdbHMbz5 — The Moon 🌙 (@TheMoonCarl) January 30, 2021

At press time, ETH is trading at $1345 with a market cap of $154 billion. Even at this stage, ETH is trading at over 80% premium year-to-date. Besides, there are two major catalysts that can trigger institutional participation for Ethereum (ETH) in the coming weeks.

CME Ether Futures launching within a week’s time The launch of Ethereum funds y Galaxy Digital in the next two weeks.

Also, the recent growth of the crypto DeFi market is positive news for ETH investors. Another interesting fact is that ETH is all set to register its highest monthly close ever.

$ETH is about to have its highest monthly close EVER. February and beyond is going to be one hell of a ride for altcoins. The chart speaks for itself. pic.twitter.com/1lBEoD96p2 — Simon Dedic (@scoinaldo) January 31, 2021

Improving On-Chain Fundamentals for Etheruem

Ethereum’s recent price rally hasn’t been just an investor frenzy but is rather backed with improving on-chain metrics and fundamentals. Popular Ethereum analyst Anthony Sassano notes:

“7.2 million $ETH is locked in DeFi. 2.8 million $ETH is locked in eth2. This means that 10 million $ETH (8.8% of the current supply) is being put to work to power the Ethereum ecosystem. That’s $13.4 billion at current prices”.

On the other hand, the Glassnode data suggests that a large number of ETH has been moving off the exchanges in recent times. It means the ETH liquidity at the exchanges is reducing as most ETH is either moving to cold storage or as deposits to Ethereum 2.0. As per Glassnode, the total number of non-zero ETH addresses has hit an all-time high.

Similarly, the total number of ETH addresses in profit has also hit an all-time high.

While signing off we would finally like to wish the Ethereum co-founder a very happy birthday and our heartfelt thanks for getting such a wonderful tech to this world.

To keep track of DeFi updates in real time, check out our DeFi news feed Here.

Ethereum explodes 21% in just one day to secure a new all-time high past $1,470 - and analysts expect it to double in the next two weeks

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Jack Taylor/Getty Images

Ethereum struck a new all-time high above $1,470 on Monday, scoring a 21% gain within 24 hours.

Its latest record high came on the seventh-year anniversary of the cryptocurrency’s launch.

Analysts expect the Ethereum price to rise as high as $3,000 in the next few weeks.

The price of Ethereum set a new all-time high, exploding by as much as 21% in 24 hours to trade above $1,470 on Monday.

The price hit $1,473, topping its previous record of $1,439 set last week, before settling around $1,396 in early European trading.

The record high came on the seven-year anniversary of the day that Vitalik Buterin, a Russian-Canadian best known for being Ethereum’s main developer, announced the cryptocurrency’s launch on a bitcoin forum in 2014.

The world’s second-largest cryptocurrency, with a market cap of $160 billion, has risen on 90% a year-to-date basis, outpacing bitcoin’s 10% rise.

But Ethereum’s rally is expected to match the momentum in bitcoin’s. Analysts at Galaxy Trading expect the price to trade as high as $3,000 in the next few weeks. Comparing bitcoin and Ethereum’s rally, the analysts noted a similar pattern of limited price momentum followed by a major breakout.

Read More: BANK OF AMERICA: Buy these 31 unheralded stocks as the recovery’s hottest trades of recent months continue to gain strength in 2021

Ether has also been seeing massive trading volumes on ZebPay, India’s oldest and most widely-used bitcoin and crypto asset exchange.

“Ether tends to follow bitcoin,” said Rahul Pagidipati, CEO of ZebPay. “Now that Bitcoin has hit record highs and is consolidating, investors are adding ether. Together they constitute about 80% of the total crypto market cap and are the biggest on ZebPay.”

Another popular cryptocurrency analyst, Lark Davis, expects Ethereum to double in the next two weeks just “like bitcoin did.”

Ethereum has gained 1,200% in value since the March 2020 coronavirus-induced market crash, compared with a 700% increase in the value of bitcoin. In 2020, the Ethereum network saw over $1 trillion worth of transactions on its blockchain - exceeding the transaction volumes of payment platforms such as PayPal.

Read More: A notorious market bear who called the dot-com bubble says he sees ‘fresh deterioration’ in the market indicator that first signaled the 1929 and 1987 crashes - and warns that stocks are ripe for a 70% drop

First Mover: Bitcoin Flushes ‘Weak Hands’ as Ethereum Hits New All-Time High

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Bitcoin (BTC) was higher on Monday at around $33,000, rebounding after a 9.9% drop in the seven days through Sunday, the biggest weekly drop since August.

“Bitcoin is seeing some consolidation itself after surviving another run at $30,000,” Craig Erlam, senior market analyst for the London-based foreign exchange brokerage Oanda, wrote Monday in an investor update. “A move back above $35,000 may start to change the conversation but the trend is against it these last few weeks and a move lower still looks more likely.”

Ether (ETH), the main cryptocurrency of the Ethereum blockchain, rose early Monday to a new all-time high price of $1,476.12. Ether, which is the second-biggest digital asset by market value after bitcoin, has nearly doubled just in January alone.

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“Given the dip from bitcoin and the steadiness of [ether], we could see investors move capital into the latter as they look for the next crypto asset that is going to perform in the current bull run,” David Derhy, an analyst with the trading platform eToro, said in emailed comments.

Read More: Big Investors Stacked up Ether as Price Rose to Record High

In traditional markets, Asian and European shares rose and U.S. stock futures pointed to a higher open as investors weighed the odds of more economic stimulus. Gold strengthened 0.4% to $1,864 an ounce.

Market moves

Bitcoin is coming off its worst week in almost five months, but the main takeaway, according to veteran digital-market traders and analysts, is that it wasn’t really all that bad.

A quick glance at price charts shows that declines at least as large as last week’s 9.9% retreat have happened nine times in the past two years.

And the cryptocurrency’s price has risen so dramatically and consistently over the period that those prior corrections almost look quaint. The worst sell-off in recent memory was the 33.5% weekly plunge in March 2020, when the devastating economic toll of the coronavirus became clear to global investors. But in absolute dollar terms, that $2,690 drop was less than last week’s $3,950 loss, showing just how far bitcoin’s price has climbed since then.

According to Kraken, the cryptocurrency exchange, buyers appeared to materialize last week whenever prices fell to about $30,000. That’s just above the $29,112 level where bitcoin started off the year, following a 2020 when it quadrupled in price.

“While 10%+ drawdowns shake conviction, these moves have been met with strong bids,” Delphi Digital, a cryptocurrency analysis firm, told clients Friday in a note. “Shaking out profit takers and ‘weak hands’ is necessary for BTC to make strides upwards.”

Chart going back to start of 2019 showing bitcoin’s biggest weekly sell-offs. Source: TradingView/CoinDesk

According to Chainalysis, a blockchain-analysis firm, bitcoin’s recent rally to new record highs above $40,000 may have been too much to resist for speculators who have only recently nosed into the cryptocurrency arena, lured by the outsize returns of recent years.

“New buyer behavior is still a major source of medium-term price volatility and is currently elevated,” Philip Gradwell, chief economist for New York-based Chainalysis, wrote Friday. “It is important to restate that the bitcoin price is still at historically very high levels.”

Ryan Selkis, CEO of the digital-markets analysis firm Messari, wrote that last week’s tumble “looked like a nice little dip for new buyers, and a wealth transfer from some of the weakest-handed sellers I’ve seen in crypto to those with an actual investment thesis.”

Data extracted from the bitcoin blockchain network show the number of addresses with at least 1,000 or more bitcoins increased last week – an indication that large institutional buyers may have been stepping into the market as prices dipped, CoinDesk’s Muyao Shen reported Friday.

“The buying pressure seen in the lower bounds of the current range have been solid,” Matt Blom, head of sales and trading at the cryptocurrency exchange firm EQUOS, told clients early Monday in a note. “The selling pressure above is in no way weaker. If bulls manage to break out, though, the move to the next level ($34,855) could be explosive and even take us further, back to the upper $38Ks.”

The upshot? Further downside might still be in store, but the limited scope of last week’s price decline reveals plenty of demand for bitcoin at levels well above prices that prevailed in 2020.

– Bradley Keoun

Bitcoin watch

Chart showing bitcoin’s performance during U.S. and Asian trading hours. Source: QCP Capital

The bitcoin market is showing signs of weakening demand from U.S.-based institutions, according to Singapore-based trading firm QCP Capital.

Comparing bitcoin’s price moves during Asia daytime hours and American hours (split into 12 hours each) shows a clear pattern of relentless buying during the North American trading hours and selling in Asia, mainly by large investors (known as whales) and cryptocurrency miners.

The pattern emerged following the March 2020 price crash and had endured until two weeks ago when bitcoin reached record highs above $41,900. Since then, the strength during U.S. hours has lost momentum, QCP Capital noted in its Telegram channel.

The flat-to-negative “Coinbase Premium” – the spread between Coinbase’s BTC/USD pair and Binance’s BTC/USDT pair, which includes the stablecoin tether – also suggests absence of strong demand from high-net-worth individuals and institutions.

“I’ll keep my bearish bias until there are significant Coinbase premium and Coinbase outflow,” Ki Young Ju, CEO of blockchain analytics firm CryptoQuant, tweeted on Sunday. “BTC needs [U.S. dollar] spot inflows from institutional investors to start the next bull run.”

As such, odds appear stacked against the cryptocurrency keeping gains above $33,000.

“We could be in for a classic ‘W’ bottom when the first bounce off the lows is met by another batch of selling before it eventually bounces back for real,” David Lifchitz, chief investment officer of the Paris-based quantitative trading firm ExoAlpha, told CoinDesk in a WhatsApp chat.

– Omkar Godbole

Token watch

Ether (ETH): Three reasons to be bullish include next month’s CME futures launch, the planned transition to 2.0 “staking network” and possible token burns via the EIP 1559 update (CoinDesk)

Chainlink (LINK): Data-oracle token hits new all-time high price above $25 (CoinDesk)

What’s hot

Key executive at Huobi crypto exchange said to be taken into custody by Chinese police in investigation related to over-the-counter trading service. (CoinDesk)

Valkyrie digital assets files application to SEC for bitcoin exchange-traded fund, joining VanEck in struggle to win U.S. regulatory approval. (CoinDesk)

Wladimir van der Laan, lead maintainer of Bitcoin Core, key software underpinning Bitcoin network, seeks to move further into the “background” for the sake of decentralizing the project, following criticism of his decision to pull Bitcoin white paper from bitcoincore.org. (CoinDesk)

Crypto exchange Coinbase now has more than $90 billion of assets on platform and more than 43 million registered users. (CoinDesk)

Singapore exchange and state-owned investment firm Temasek announce joint digital-asset venture focused on capital markets. (CoinDesk)

New Innovation Hub from Bank of International Settlements (the central bank for central banks) plans platform for testing central bank digital currencies. (CoinDesk)

Coinbase to offer secondary market for private shares ahead of public stock listing, as pre-IPO contracts change hands at valuation of more than $70 billion. (The Block)

CNBC stock-picking personality Jim Cramer suggests winner of $731 million Powerball jackpot should put 5% of newfound fortune in bitcoin. (CoinDesk)

MicroStrategy’s $650 million of convertible bonds offer “very little downside and an almost-free call option on bitcoin,” writes Bill Miller IV, portfolio manager for investing legend Bill Miller’s Miller Value Partners. (Miller Value Partners)

Bloomberg senior ETF analyst Eric Balchunas argues that SEC is long “past due” in approving a bitcoin ETF. (Bloomberg Opinion)

Crypto Twitter trader/analyst @CryptoCapo_ says drop in open interest in coin-margined bitcon-derivatives contracts signals market bottom is in. (Daily Hodl)

“New U.S. regulations regarding non-custodial wallets may push more cryptocurrency users to skip the exchanges altogether and use their coins to directly buy and sell goods and services,” Joel Valenzuela writes. (Cointelegraph)

Analogs

The latest on the economy and traditional finance

U.S. President Biden unlikely to raise taxes anywhere close to covering his spending proposals. (NYT)

Biden to push Congress on stimulus after senators question cost. (Bloomberg)

China overtakes U.S. as world’s leading destination for foreign direct investment. (WSJ)

Investor demand for lowest-rated junk bonds pushes yields to record lows; index of triple-C-rated corporate bonds drops to all-time low of 6.42%, below where 10-year U.S. Treasury-bond yields traded for most of the 1970s, 1980s and 1990s, (WSJ)

Goldman Sachs stock-underwriting fees surged to $3.41 billion in 2020, more than double the prior year’s amount, buoyed by IPOs for SPACs. (WSJ)

One-third of staff may work from home permanently post-coronavirus. (Bloomberg)

Coronavirus financial toll mounts as homeowners keep postponing mortgage payments. (WSJ)

More than 5% of U.S. mortgages are still in forbearance, up from less than 1% pre-pandemic. Source: WSJ

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