Ethereum (ETH) is on the rise, following the footsteps of Bitcoin (BTC) as it approaches the critical $66.4k resistance level. With a price increase of over 3% to reach around $2,610 during the early European session on Tuesday, Ethereum is showing signs of potential bullish momentum. The major altcoin, valued at roughly $314 billion on a fully diluted basis with an average daily trading volume of around $20 billion, climbed to a range high of $2,638.
However, the recent spike in Ethereum’s price raises questions about whether this is just a temporary surge or if there is something more significant at play. Let’s take a closer look at what factors are impacting Ethereum’s price and what the future may hold for the popular cryptocurrency.
### What’s Impacting the Ethereum Price?
Ethereum has been under pressure recently, facing a selloff from institutional investors amid sluggish demand. The approval of spot Ether ETFs by the U.S. Securities and Exchange Commission (SEC) has led to net cash outflows exceeding $541 million, signaling ongoing uncertainty in the market.
Despite these challenges, veteran trader Peter Brandt sees a potential bullish turn for Ethereum. He pointed out that ETH appears to be forming an inverted head and shoulders (H&S) pattern, which is often a signal of a possible trend reversal. This pattern emerged after the price of Ethereum spent the past seven months below the $3,000 mark.
### ETH/BTC Pair Analysis
The ETH/BTC pair has found solid support around 0.038, indicating a possible rebound after forming a double bottom. Additionally, the Relative Strength Index (RSI) shows a rising bullish divergence, suggesting growing strength in the market and the potential for an upward movement.
### Contrasting Wall Street Opinions
The approval of spot Ether ETFs in various regions has brought increased scrutiny to Ethereum’s ecosystem. While some industry leaders remain optimistic about Ethereum’s future growth, others have raised concerns about its long-term sustainability.
BlackRock CEO Larry Fink predicts significant growth for Ethereum in the coming years, driven by rising liquidity and improved transparency. Currently, Ethereum leads in total value locked (TVL) and stablecoin market capitalization, showcasing its dominance in the decentralized finance (DeFi) space.
On the other hand, some experts like Justin Bons, founder and CIO of Cyber Capital, have warned about potential red flags for Ethereum. Concerns include high transaction fees on Ethereum’s Layer 1 network, making it less attractive compared to competing platforms like BNB Chain, Solana (SOL), and Tron (TRX).
### Red Flags for Ethereum – Watch Out!
Bons also highlighted the shift towards Ethereum’s Layer 2 (L2) scaling solutions, which aim to reduce transaction fees but could potentially impact the L1 network negatively. As platforms like Uniswap (UNI) expand to L2 networks, there may be a decrease in fees collected on L1, posing challenges for Ethereum’s economic sustainability.
### What Should Your Next Move Be?
As Ethereum’s price approaches a potential breakout, investors should closely monitor key market signals and expert opinions to make informed decisions. While some predict strong growth for Ethereum supported by liquidity and scaling solutions, others caution about economic and structural issues that may hinder its long-term success.
In conclusion, the future of Ethereum remains uncertain, with both bullish and bearish factors at play. It is essential for investors to stay informed and adapt their strategies accordingly as the cryptocurrency market continues to evolve.