The second-largest cryptocurrency after Bitcoin, Ethereum price continues to show strength, keeping altcoins elevated. Its value has grown by 16% in the last seven days to $2,909 compared to BTC’s 7% increase to $52,009 over the same period.
Based on the prevailing technical picture backed by strong fundamentals, ETH price shows signs of extending the bullish outlook, possibly outperforming Bitcoin.
What’s Driving Ethereum Price Higher?
After surging over the weekend, topping out at $2,935, Ethereum price faces volatility in tandem with Bitcoin. Traders have in recent weeks focused on BTC as it steadied the uptrend bolstered by the approval of Bitcoin ETFs in the US as well as the halving hype cycle — an event that occurs every four years, reducing miner rewards by half.
As for Ethereum, there has been a noticeable shift in its supply, which continues to shrink since the transition to the proof of stake (PoS) consensus mechanism. According to Greg Magadini, director of derivatives Amberdata, a lot of attention is being given to Bitcoin due to the halving in April, while “the active ‘REDUCTION’ goes unnoticed.
“ETH is the next play here! Low ETH/BTC ratio, actively finding a bid, [with ETH’s] fundamental supply picture even better than BTC,” Magadini said in a comment on the outlook of Ethereum price.
Following the Merge, the upgrade that finalized the transition to PoS, 1,047,643 ETH have been added to the supply. However, 1,407,200 ETH have also been burned or removed from the available supply. This translates to a new supply reduction of 359,557 ETH.
Bitcoin, on the other hand, posted a 1.7% growth in supply over the same period, implying that Ethereum is a deflationary asset, thanks to the program that burns a part of the transaction fees network validators receive.
On top of the supply reduction, over 25% of Ethereum’s supply is currently locked in staking contracts, approximately 30.1 million Ether.
The community is also looking forward to the Dencun upgrade in March, which successfully launched on three testnets, the last being Holesky on February 11. This upgrade will help decongestion the Ethereum network and make transactions cheaper, especially for layer 2 protocols like Polygon and Arbitrum.
The approval of spot Bitcoin ETFs has seen speculation turn to Ethereum. ETFs allow investors to seek exposure to crypto without physically buying the coins. The supply cringe, the increase in staked ETH and the growing hype for spot ETF, all back a bullish thesis for Ethereum.
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Ethereum Price Prediction: Will ETH Hit $3,600 This Week?
Ethereum price made a weekly close above the range high approximately at $2,800 — a development likely to reinforce the breakout momentum this week. According to Rekt Capital, an analyst and trader, “previous weekly closes above this range high in bull markets” have paved the way for further upward price action.
$ETH has Weekly Closed above its Range High, kickstarting a breakout process from its red-red range
Previous Weekly Closes above this Range High in a Bull Market are marked with yellow circles
Past 1W Closes above this RH in a Bear Market -> red circles#ETH #Crypto #Ethereum pic.twitter.com/msfiX01PL1
— Rekt Capital (@rektcapital) February 19, 2024
The weekly chart reveals Ethereum price holding above the 0.5 Fibonacci level but struggling to beat resistance shown in the yellow band. Since the Moving Average Convergence Divergence (MACD) indicator dons a buy signal on top of its position at 232 and sturdy histograms, there’s a higher probability of the bullish narrative staying put.
Ethereum price chart | Tradingview
With another weekly close above the 0.5% Fibonacci level, Ethereum price is bound to gain momentum for a debut above $3,000. FOMO and Dencun upgrade mainnet launch in March could push ETH to $3,600 before Bitcoin halving in April.
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