Ethereum hit a new milestone this Thursday when its price hit nearly $ 1,700 for the first time in history.
The ETH / USD exchange rate hit $ 1,699 on the Coinbase exchange, after rising 29.79 percent this week. Traders poured into the Ethereum market after their futures contracts started on the Chicago Mercantile Exchange (CME) and the prospect of an impending supply crisis.
The gains were also evident when Grayscale Investments, a crypto-enabled investment firm in New York, bought Ethereum tokens valued at $ 70 million, increasing the total to $ 4.91 billion. The company’s crypto accumulation tends to result in a higher price, as the market observed during its bitcoin buying spree in 2020.
Grayscale is only $ 47k and $ ltc 12k oug pic.twitter.com/63kfouIfEn
– Hendy Wiranata (@HieronimusHendy) February 3, 2021
The accumulation of grayscale also indicates an increase in institutional demand for Ethereum. As the Bitcoin rally overheated after hitting the record high of $ 42,000, traders / investors began trading their profits for tokens with maximum long-term potential. During this time, Ethereum, UniSwap, AAVE, and Chainlink saw their all-time highs.
Outbreak underway
Meanwhile, supportive technical indicators provided Ethereum with further tailwind. The recent uptrend of the second largest cryptocurrency had resulted in a short-term resistance level that, coupled with an upwardly sloping support trendline, forms an ascending triangle.
In hindsight, ascending triangle patterns are bullish continuation signals in an uptrend. Traders typically wait for a high volume breakout above the resistance trendline to take long positions to a higher price level. Ideally, the top target can be calculated by measuring the length of the flagpole – the upward movement before the triangle was formed.
The eruption of the Ethereum triangle is underway. Source: ETHUSD on TradingView.comEthereum Triangle Breakout is ongoing. Source: ETHUSD on TradingView.com
In the case of Ethereum, the height of the flagpole that formed in front of the ascending triangle is just over $ 700. Meanwhile, the level from which the cryptocurrency broke out is at $ 1,441. This means that the upward target of the Ethereum triangle is ideally USD 2,141.
Ethereum downside risks
The prospects for a higher price level met counterbalancing catalysts that could lower Ethereum. The most important among them is a growing bearish divergence between the price of the cryptocurrency and its volumes and dynamics.
Ethereum’s declining divergence could lead to price cuts. Source: ETHUSD on TradingView.com The declining divergence of Ethereum carries the risk of lowering the price. Source: ETHUSD on TradingView.com
This is because bearish divergences signal a slowdown in the ongoing momentum. Excerpts from Investopedia:
“Bearish divergences mean potential downtrends if prices rise to new highs while the oscillator refuses to make a new high. In this situation, bulls lose control of the market, prices rise only from inertia, and the bears are ready to take control again. “
