ETH Breaks Higher as Broader Market Stalls, ATHs in Sight?

Ethereum (ETH/USD) has been a stand-out performer since the start of the week in cryptocurrency markets this week. For what its worth, crypto markets have been having a good week and have broadly continued to push higher since last Friday’s Omicron Covid-19 variant-related risk-off driven decline.

The overall crypto market cap on Wednesday morning was back above $2.6T from the weekend’s sub $2.4T lows, marking a more than 12% recovery from recent lows. The market cap of the overall market has been unable to move back above $2.7T, an area that has acted as resistance now going back to mid-November.

Ethereum Breaks Higher, ATHs in Sight?

In contrast to the broader market’s struggles to break out, ETH on Tuesday surged above a key downtrend that had been capping the price action going back to the November 10^th record highs and also managed to push above last week’s near $4600 highs.

Those gains came despite a downturn in the market’s broader appetite for risk assets on Tuesday amid concerns about vaccine efficacy versus the Omicron variant and worries about the US Federal Reserve removing monetary stimulus faster than expected in spite of pandemic risks.

ETH’s positive momentum has carried through into Wednesday’s session, with the cryptocurrency now closer to $4800, taking its on-the-week gains to north of 10%. At current levels, ETH/USD is only about 2.5% below its record highs, a distance that crypto investors know can be covered in very short order in the highly volatile crypto space.

On the four-hour candlesticks, ETH/USD has become overbought. The cryptocurrency’s 14-period Relative Strength Indicator (RSI) was slightly above 74.00 on Wednesday, its highest since the 9^th of November, the day before the market’s previous top. An RSI score above 70.00 is typically seen as indicative of conditions having become overbought.

In the short term, that could act to deter further buyers from piling in.

But on the daily candlesticks, the RSI score is a much more modest 59.50, implying that there is plenty of room for further gains in the medium-term without conditions becoming overbought. Few crypto investors would be surprised to see Ethereum hit fresh record highs later on Wednesday or at some point later in the week.

Ethereum Continues to Outperform Bitcoin

One notable crypto market development this week has been the surge higher in the ethereum/bitcoin ratio. ETH/BTC surged above its previous record high from back in May at 0.08232 to move above 0.083 for the first time. In other words, the value of one ethereum has now surpassed 8.3% of one bitcoin.

Wednesday’s move higher in the ratio takes ETH/BTC’s gains on the week to above 10%, after the crypto pair began the week closer to 0.075. The recent move high marks a breakout from a pennant that had constrained the price action between 0.055-0.080ish parameters for most of the last three and a half months.

As of Wednesday, ethereum’s market capitalisation was slightly more than $560B, slightly more than half of bitcoin’s $1.08T. But ethereum has seen stunning catch up to its older peer bitcoin in 2021, with gains on the year of more than 500% versus less than 100% for bitcoin.

According to crypto analyst CEO and co-founder of crypto platform FRNT Financial Inc Stephane Ouellette, who spoke to Bloomberg on Tuesday, “the current BTC trading window seems to associate the asset more with global currency trends, inflation hedges, etc… while ETH has, at least from a current market perception standpoint, higher correlations with the growth of crypto sub-sectors.”

These growth subsectors include DeFi, non-fungible tokens and the so-called metaverse, he added.