Ethereum rallied again on Thursday, reaching up above the $1,950 level to nearly tie the ATH currently just under $2,000 before pulling back, closing the daily candle around $1,925. This is a bullish continuation to ETH's recent resumption upward as it bounced off support above the 50 Day EMA, pushing ETH up again toward $2,000.
(February 18, 2021 7:30 PM EST)
Outlook:
ETH rallied again, putting in another higher high as ETH recovers from early this week's slight pullback, parrying it and now targeting the $2K level again. This would be a milestone for ETH as it would be the first multi-five-figure price level ETH has ever reached before. It may find some resistance there, though there is so much buying pressure underneath as well as bullish catalysts that it shouldn't be a surprise to anyone if ETH breaks out higher above $2,000 as early as the next few days.
As I have outlined in my chart above, I think it's possible that ETH could pullback after grazing $2,000, this is actually turning into my alternate view, as the recent BTC breakout higher and depreciation of the ETH/BTC ratio now puts the winds at ETH's back, sort of pressing ETH down in a slingshot that should shoot back up to revert back to the mean. I think the ETH/BTC ratio, as discussed below, will power ETH to new highs north of $2,000 in short order.
EIP-1559
In ETH 2.0 news, there is a call scheduled on 2/26 to discuss the implementation of Ethereum Improvement Protocol 1559, a transaction pricing mechanism that would not only mandate fixed per-block network fees but also burn those same fees and adjust block sizes to deal with transient congestion. So, this does 3 things:
1. Makes ETH network fees predictable
2. Makes ETH nearly deflationary
3. Adds a small efficiency patch for current network congestion
ETH/BTC:
As you can see in the ETH/BTC chart below, ETH bounced nicely today, finding support at the ~0.035 level and rallying to north of 0.037, closing the daily candle at the highs. This is a bullish candle, of course, as ETH found support at a rather significant level -- the 50 Day EMA - and rallied against Bitcoin which took a breather today after reaching $52.5K and has since pulled back a bit. As you can see in the chart below, I outlined my two bullish scenarios that would need to play out to keep the ETH/BTC uptrend alive. After today's rally, it appears that we may be seeing the first (and more bullish) scenario. If ETH/BTC can continue rallying from here and eventually grind back up to 0.04 and higher, then that should be more than enough to spark ETH/USD well over $2,000 and maybe even $3,000. Even if ETH simply trades sideways from here and in a long, boring consolidation pattern, that would also be good news as an indication of a forming bottoming pattern and a higher low, setting us up for the next wave higher.
Historically, this ETH/BTC level is very low for ETH and typically offers excellent value for ETH and a favorable risk-reward ratio as an investment opportunity, as we are in a clear crypto bull market. With ETH closely lagging behind BTC, following this recent breakout, ETH should follow in tow.
Current Strategy:
HODL, buy the dips and earn ETH while we enjoy the ride. There's not much to do now other than sit back and let your investments grow. Otherwise, DCA on a weekly/biweekly basis, whatever you can afford if you so desire.
Support:
$1,500 - $1,400 (likely), then $1,200 (less likely), then $1,000 (concrete floor).
Resistance:
Immediate-term $2,000, then $2,500, then $3,000.
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