Ethereum prices rebounded Tuesday when a recent sell-off in the cryptocurrency market prompted traders to buy the dip.
The world’s second largest cryptocurrency rose to its two-week high of $ 1,859.62 on Coinbase, a US-based cryptocurrency exchange, during the early Asian session. It began to correct short-term selling sentiment but maintained its weekly upward tilt on supportive internal and macro factors.
Ethereum’s upward move appeared largely in line with a similar price jump in the Bitcoin market. The correlation efficiency between the two assets is close to 0.88, which indicates that Ethereum is most likely to track trends in the Bitcoin bazaar.
Ethereum correlation with Bitcoin. Source: ETHUSD on TradingView.com
In retrospect, Bitcoin rebounded this week after being added to the balance sheets of Meitu, a Chinese photo editing app, and Aker ASA’s new cryptocurrency wing, Sea Tea AS. The gains were also evident as US Treasury bond yields showed signs of calming after rebounding relentlessly over the past two weeks.
Many analysts noted that a surge in bond yields hurt investors’ appetites for assets, which performed exceptionally well during the coronavirus pandemic in 2020. These include bitcoin, gold, and technology stocks; All rebounded on the unprecedented monetary restraint of the Federal Reserve. Higher yields suggested that the US Federal Reserve could raise interest rates in the future.
Ethereum also tumbled alongside Bitcoin as bond yields rose for the week ending February 28. But the cryptocurrency has maintained its positive trend since then and now has $ 2,000 as its next bullish target. Bitcoin bulls, on the flip side, have hit a similar upside target near $ 60,000.
“Ethereum clearly reflects the performance of Bitcoin and indicates a strong correlation. The only difference is that it sees a lot of smaller swings while taking the same big path that BTC is taking,” said Greg Waisman, Co-Founder / COO of Payment company Mercuryo said NewsBTC in an email response.
“If BTC’s dominance remains strong, Ethereum will likely remain correlated,” he added.
Technical outlook for Ethereum
The technical structures in Ethereum’s shorter timeframe charts suggest expanded rallies for the cryptocurrency.
Ethereum corrects lower after testing resistance area in mid-February. Source: ETHUSD on TradingView.com
ETH / USD is now testing the February 12 resistance area for a bullish breakout attempt. A successful close above the range puts the pair on its way to its previous high of $ 2,041. On a pullback, traders would test $ 1,750 as their next support target, with an expanded breakdown leading to the 200-4 hour moving average (the orange wave).