The Ethereum market has been rather quiet during early trading hours on Wednesday, as we continue to hover just above the $2000 level. The $2000 level is obviously a large, round, psychologically significant figure, and therefore it does make a lot of sense that we would see this as an area that people will pay close attention to. The market has been very noisy over the last couple of weeks, so I think it’s more of the same just waiting to happen. The market seems to have support all the way down to the $1925 level, with the $2125 level above offering a significant amount of resistance.
In general, this is a market that I think continues to see a lot of volatility, which does make a certain amount of sense as we are asking a lot of questions of the bond market currently, which has a influence on interest rates. Interest rates have an even bigger influence on cryptocurrency, as cryptocurrency doesn’t do very well in tight monetary policy. That being said, we have only seen tight monetary policy come into the picture once, but it’s been a disaster for crypto. If traders continue to see lower interest rates, then it’s very likely that we will continue to see higher prices in crypto.
All things being equal, this is market that continues to see a lot of noise and therefore you need to recognize that we need to see some type of fundamental certainty with the interest rates situation to really move from here, but it certainly looks as if the consolidation is more likely than not going to lead to more continuation. However, if we were to break down below the $1800 level, I think at that point in time Ethereum could be in trouble.
Furthermore, pay attention to Bitcoin, because it does tend to lead the rest of the crypto markets, so if it starts to take off to the upside, then it’s likely that we would see Ethereum follow right along with it. On the other hand, if we see Bitcoin start falling apart, Ethereum will get absolutely pummeled as a result. In general, it does look like we are trying to build up the upward momentum, but we still haven’t broken out.
Being FXEmpire’s analyst since the early days of the website, Chris has over 20 years of experience across various markets and assets – currencies, indices, and commodities. He is a proprietary trader as well trading institutional accounts.