Ethereum Price Surges and Faces Liquidity Challenges
Ethereum price has experienced a roller coaster ride, reaching $3,000 for the first time since April 2022 before retracing to $2,900 to gather more liquidity. The number two cryptocurrency has several catalysts behind its stellar performance:
- The Dencun upgrade
- The spot ETF
These factors give Ethereum an edge over Bitcoin. In the past week, ETH has gained 6% in value, outshining its peer. However, Bitcoin faces liquidity challenges at $53,000, which it must clear to maintain its uptrend.
On the other hand, Ethereum slipped below $51,000 but could potentially rebound to pre-halving levels between $58,000 and $60,000.
How Surge In Staking Could Trigger Ethereum Price Rally
After the Merge upgrade, Ethereum transitioned to a proof-of-stake consensus mechanism. Since then, the supply of ETH has increased by 1,047,643 tokens. However, 1,407,200 ETH have been burned or taken out of circulation. This results in a net supply drop of 359,557 ETH.
In contrast, Bitcoin’s supply grew by 1.7% during the same period. This shows that Ethereum is becoming a scarce asset due to the mechanism that destroys transaction fees paid to validators.
Furthermore, more than a quarter of Ethereum’s supply (30.1 million ETH) is locked in staking contracts. This reduces sell-side pressure and affirms long-term bullish sentiment in the market.
The total value locked (TVL) in Ethereum’s decentralized ecosystem has also increased significantly to over $45 billion.
Ethereum Price Technical Outlook: Bullish Or Bearish?
As Ethereum surpasses $3,000, several key levels are emerging. While the climb above $3,000 was initially bullish, failure to close above it led to a correction to $2,900. The next crucial area is the support level around $2,800.
If several four-hour candles close below $2,900, additional dips to the $2,800 support level may occur. This allows Ether to collect liquidity as investors buy the dip. The 50-day Exponential Moving Average (EMA) supports this demand zone.
The technical structure remains bullish unless the 50-day EMA becomes an immediate resistance. Traders can take advantage of dips to gain exposure to Ethereum ahead of its next breakout attempt above $3,000.
Hot Take: Ethereum’s Potential Rally Ahead
Ethereum’s surge in price and the factors driving it suggest a potential parabolic rally in the coming months:
- The upcoming Ethereum Dencun upgrade
- The hype surrounding a potential spot ETF
- Momentum from the anticipated Bitcoin halving in April
Historical price action supports halvings as triggers for bull runs not only for Bitcoin but also for altcoins. Therefore, you should keep a close eye on Ethereum as it continues its upward trajectory.
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